The Australian Dollar continued to fall against the majors in the lead up to the weekend following softening commodity prices and strong international economic data.
Friday saw the release of the percentage change to Investment Lending and Home Loans in Australia for the month of August. Both figures were less than expected an indicated a negative change for the month of August in comparison to the previous month, however, little movement to the AUD was seen following the announcement. It wasn’t until the European session opened that the ‘Aussie’ took a tumble by losing over half a percent to the EUR and GBP and close to a percent against the USD and CAD.
Canada reported on their employment conditions prior to weekend and the result much better than expected with their official Unemployment Rate remaining at dropping from 7.0% to 6.8% and the Net Change in Employment being over 74K. The ‘Loonie’ responded by making significant gains against the ‘Aussie’. The CAD over took the AUD currency a couple of weeks back and has since held and extended its’ position ahead of parity.
A relatively stable day of trading is expected today due to the lack of high-tier domestic and international data releases. The Chinese Trade Balance figure is scheduled to be released later today is likely to be the most significant market mover for the AUD over today’s trading session. Tomorrow the NAB Business Confidence will be announced out of Australia and again, Chinese economic data in the form of Foreign Direct Investment will play a part in swaying the value of the Australian Dollar.
Currently, the AUD to GBP exchange rate is sitting slightly higher than the 6 month lows we saw a couple of weeks back, after recovering slightly. Tomorrow evening the focus will be on the UK economy with the release of their current inflation levels. The Consumer Price Index (CPI) has proven previously to be a major market mover when the result is unexpectedly high. The current annualised CPI figure in the UK is sitting at 1.5% and the forecast is that we will see a slight drop to 1.4%. A higher than expected figure is likely to cause the GBP to surge, whilst a weaker than expected figure will provide support to the AUD.
Overall the AUD still remains vulnerable. Although we saw some positive movements throughout last week, much of the ground gained by the Australian Dollar was lost prior to weekend, leaving the currency trading close to the lowest levels of the year.