The Australian Dollar has continued to fall against the majors. Opening over half a per cent lower against the Pound Sterling (AUD/GBP), 0.6% lower against the Euro (AUD/EUR) and 0.45% lower against the US Dollar (AUD/USD) where it has dropped below the 85 US Cent range and is currently trading at 84.68 US Cents at 8:00 AM AEST Today.
Today will be Purchasing Managers Index (PMI) focused for many countries with the releases of the monthly surveys of purchasing managers in the manufacturing industry. This provides leading indicators of economic health through the early reactions of businesses to market conditions.
Today will see the release of the Australian Industry Group (AIG) Manufacturing Index. The last result was a fall below the expansion contraction line at 49.4. Later today during the local session will also provide the release of the Manufacturing PMI release for China, which is forecasted for a result just about the expansion line at 50.5. For the Australian Dollar to hope to recover from any of the losses it has sustained over the last week, the figures for both Australian and China need to come in above expectations and above the expansion line.
During the offshore session tonight, the PMI theme will continue with the release of PMI figures for the UK, the US and Euro-zone releases for Italy and Spain.
The Australian Dollar lost considerable ground last week with weaken commodities pricing and the announcement by Reserve Bank of Australia’s (RBA) Governor Phillip Lowe indicated that a rate cut could be necessary if the state of the Australian economy stating “My judgement would be that if further interest rate reductions were required, they would have some effect in stimulating economic activity.”
Investors will be waiting with anticipation for the RBA’s Interest Rate decision tomorrow and accompanying speech to see if this stance in further confirmed by Governor Glenn Stevens as the next possible movement for the Australian Cash Rate. If this is further confirmed by Governor Stevens we could well see even further sell-off of the Australian Dollar as the rate drop is built into the AUD Exchange rates pricing.