After a slow start to the week the Australian Dollar made some gains yesterday on the back of slightly better than expected local and Chinese data. These gains continued overnight in offshore sessions to push the Australian Dollar to US Dollar exchange rate back over the 70 cent mark.
At Wednesday 08:00am the AUD/USD Exchange Rate was trading at 0.7035
The Australian Dollar has been in a world of pain in recent weeks following ongoing global financial worries; and concerns over the current state of the Chinese economy. The Australian Dollar to US Dollar (AUD/USD) exchange rate has steadily declined over recent weeks; to break through the critical .70 cent mark late last week for the first time since March 2009.
The AUD experienced a small jump following the release of Business Confidence from the National Australia Bank (NAB) yesterday. Following the release of the NAB survey at 11:30am the AUD shot up to 0.6972 cents but drifted back to 0.6948 by 12:30pm. The report indicated that business confidence remained positive in August despite weakness in the mining sector.
The NAB’s monthly business survey found that conditions in August had improved, with the trend index rising to a new six year high. The report however also indicated that the confidence index had fallen to its lowest level since mid-2013 amid recent financial market turmoil.
NAB senior economist James Glenn stating “This outcome adds to the mounting evidence that the Australian Dollar depreciation and record low interest rates are having the desired effect and helping to offset the weakness in mining.
In other important announcements Australia’s largest trading partner China yesterday released its Trade Balance figure for August. The report released by the Chinese Customs Administration indicated that exports fell by over 5.5% year on year, while imports plummeted nearly 14% over the same period, nearly double what was expected, leaving the country with a trade surplus of $60.24 billion for the month.
Despite the result being slightly better than expected, the Aussie dollar fell somewhat on the news, giving back gains made from the NAB Business Survey.
With minimal high tier data due to be released out of local and offshore markets today all eyes will be on Thursday for market moving announcements. With several high tier announcements due out locally and internationally, tomorrow we can expect to see significant market volatility.
The first of which will be the Canadian Interest rate announcement due out at 12:30am. While it is expected that the Bank of Canada (BAC) will keep interest rates on hold at the current record low of 0.5%, any guidance in the accompanying statement or hints towards future rate movements may drive significant movement in the AUD/CAD pairing.
Later in the morning the Reserve Bank of New Zealand (RBNZ) is set to announce its Interest rate decision. With all surveyed economists expecting the official cash rate out of NZ to be cut from 3% to 2.75% we might discover a cut has already been priced in. It is worth noting that any deviation from this result could really shake the market.