The Australian Dollar exchange rate dived against all majors Wednesday night and during the local session of yesterday’s trading, losing over 1% against the Pound (AUD/GBP), the US Dollar (AUD/USD), and the Euro (AUD/EUR).
Despite a lack of high level economic data out of Australia, the Australian Dollar exchange rate has experienced a significant amount of volatility this week. The considerable losses seen during the last twenty four hours of trading were compounded by the further lows in iron ore pricing and the lacklustre data out of China in the form of Manufacturing PMI.
After the finalisation of the Free-trade Agreement with China over the weekend, experts are predicting further dependency on the health of the Chinese Economy and the disappointing Manufacturing data out of China yesterday caused investors to exit the Australian Dollar causing a significant sell-off.
The Australian Dollar US Dollar Exchange Rate dropped below 86 US Cents.
During Thursdays local trading session the AUD/USD fell to as low as 85.62 US Cents, after the Hawkish US Federal Open Market Committee Meeting provided positive sentiment for the US Dollar. The FOMC confirmed the finalisation of the Quantitative Easing Program (QE) at last month’s meeting.
This month, The Fed made comments on weaker economic outlook and downside risks in Europe, China, and Japan, however the FOMC has made the observation that the impact of the weaker global outlook is likely to be limited. The focus of The Fed is still quite clearly based on improvement to the labour market and inflation sustainability.
The US Bureau of Statistics releases the monthly figure for Consumer Price Index (CPI) during the offshore session last night. The forecast for the month was a result of -0.1% which was a decline from the previous month’s figure of 0.1%. The result came in at 0.0%, surprisingly better than the expectation.
The US also released their Unemployment Claims which was a higher figure than the forecast coming in at 291,000. This data release caused the AUD/USD Exchange Rate to make some recovery, and the pair is currently back around 86 cents this morning trading at 86.24 US Cents at 8:30 AM AEST today.
The Australian Dollar, Euro Exchange Rate fluctuates as Euro zone growth hits a 16 month low. The Euro zone released Manufacturing PMI data for the combined Euro economy along with the results for Germany and France overnight. The results all showed a continuing decline. The combined Central Euro result was a figure of 50.4, below the expectations of 50.9, further declining month on month.
Markit Chief Economist Chris Williamson said in a statement that the fall in the euro zone PMI to a 16 month low raises the risk of the region slipping back into a renewed downturn. Williamson added that ‘the deteriorating trend in the surveys will add to pressure for the ECB to do more to boost the economy without waiting to gauge the effectiveness of previously-announced initiatives’.
The Individual figure for the German PMI was a reduction on the previous month’s figure, which is concerning for the Euro economy. As the power house of the Euro zone, issues in the German economy translates to significant issues for the region.
The AUD/EUR Exchange rate is currently trading at 0.6873 at 8:30 AM AEST Today.
Today will provide the release of no significant local data during the local session however we may still see significant fluctuations as local investors digest last night’s high level activity.