The Australian Dollar has continued its’ selloff from last week with little reprieve in sight for the Antipodean currency. The Aussie has lost a tad over 8% against most majors due in no small part to the rout that we have seen in commodity prices over the same time period. Iron ore is sitting at 5 year lows and copper is nearing a retest of 5 years lows set back in January of this year which saw a bounce in both copper and the Australian Dollar.
This close correlation with commodities and the Aussie Dollar, has the potential to see the Dollar retest its own lows as there are several calls floating around by several investment, UBS being one of them who are calling for Iron ore to begin a new wave down in early 2015.This selloff in commodities has been as a result of the slowdown we are seeing from China, which has a direct correlation with Australia as China is Australia’s largest trading partner.
Last night saw the release of the German IFO which is a monthly survey that measures the business climate in Germany and is widely followed as an early indicator of the state of the German Economy. Expectations were for a figure of 105.8 while the release was a slight miss coming in at 104.7, nothing really to start panicking about but definitely something to keep an eye on for future months to see if a pattern is emerging of a slowdown in the largest economy in the Euro Zone.
Over in the U.S saw New Home Sales for August released with a beat to forecasts of 430k. 504 Thousand new homes were sold which continues to show an improvement month on month which must buoy confidence in a sector that was ravaged during the Global Financial Crisis. Tonight in the U.S sees Durable Goods Orders set to be released 10.30pm AEST.The above mentioned data release is an economic indicator that measures the change in sales levels of products that have a lifespan of 3 years or more. At the time of writing the U.S Dollar continues to defy gravity with an impressive rally that has seen it extend a run that began in mid July.