The Australian Dollar has continued to make losses against majors during the offshore trading session most significant losses included over half a percent against the Pound Sterling (AUD/GBP) and 0.7% against the New Zealand Dollar (AUD/NZD) which has now dropped below the 1.09 floor.
The Australian Dollar to Pound Sterling Exchange rate made it to a low of 0.5383 overnight. There has been a lack of local economic data this week out of the Australian economy, and the Australian dollar has dropped based on poor commodities pricing and the announcement by Reserve Bank of Australia’s (RBA) Deputy Governor Phillip Lowe indicating that a rate cut could be necessary if the state of the Australian economy did not improve which he considered would have a ‘stimulating effect’.
The UK overnight released their official estimate of Gross Domestic Product figure for quarter three the forecast was for a decline from the previous quarter at 0.7% down from quarter two which was a figure of 0.8%. The figure was in line with the expectations. The decline is attributed primarily to the services sector of the economy. Despite the figure signalling a slow down from last quarter investors have continued to sell off the AUD in favour of the GBP which after the initial release dropped considerably, the AUD has made some recovery and is sitting currently at 0.5410 at 8:00AM AEST Today.
New Zealand Trade Balance Figure signals a fall in Exports. New Zealand this morning released their Trade Balance figure which has come in significantly lower than the expectation however an improvement from the previous months figure. The economists had predicted a figure of -645 Million, however the result was -908 Million, which is still an improvement on last month’s figure of -1350 Million.
Key points from this release were the increase in exports to Australia in the form of crude oil and a decline in the Milk powder exports to China. Exports for New Zealand are now higher into Australia than to China by $185 Million.
This figure caused the Australian Dollar to drop below the 1.09 floor that it has been testing against the New Zealand dollar for many months to a low of 1.0811, The AUD/NZD exchange rate has made some recovery however is still trading in the mid 1.08 range today.
US Unemployment Claims disappoints. The US released their unemployment claims during the offshore session, which came in higher than both the forecast and the previous months figure. The result was 313,000 claims for the month. Last month’s result was at 291,000. The current month’s figure is a disappointing result for the labour market of the US, which has always been quite a focal point for the Fed in relation to the health of their economy and the potential for Interest Rate rises. Whilst this figure was not on par with analysts’ expectations, the US Dollar did not lose ground against the AUD which is still experiencing considerable weakness from the Commodities pricing and Governors Lowe’s speech.
Today will see the only high level data release for the Australian economy for the week in the form of Private Capital Expenditure. The Australian Dollar needs this figure to come in above the expectation if it is going to make any recovery from the losses sustained this week.