GBP/AUD and USD/AUD Exchange Rates Fall On Positive ‘Aussie’ Data and Overdone ‘Greenback’
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The South Pacific currency dropped towards a four-year low against the ‘Greenback’ and lost over 0.5% against the Pound as economists responded to less-than-impressive Australian manufacturing and retail sales figures.
The Pound had previously advanced on the Australian Dollar after being bolstered by an upward revision to the UK’s second quarter GDP. Similarly, the US Dollar’s bullish relationship with its peers persisted amid geopolitical tensions and Fed rate hike expectations.
Australian Dollar losses were exacerbated as domestic fundamentals fell short, adding to the argument in favour of the Reserve Bank of Australia either maintaining interest rates at present levels or considering a further cut.
Australia’s AiG Performance of Manufacturing Index fell from 47.3 in August to 46.5 in September, sliding further below the 50 mark separating growth from contraction.
According to AiG Executive Innes Willox; ‘Falls in production, sales and new orders underpinned the further slowing of manufacturing in September and have left the sector struggling short of the recovery that was tentatively suggested in July. While businesses welcomed the significant correction in the value of the Australian Dollar in September, it will take some time before competitiveness in domestic and export markets improves. Respondents to the Australian PMI suggested that the winding down of Australian automotive assembly and the ongoing downturn in mining construction activity are dampening demand for locally-made products and components.’
The Pound to Australian Dollar (GBP/AUD) exchange rate hit a high of 1.8684
The US Dollar to Australian Dollar (USD/GBP) exchange rate hit a high of 1.1547
Further Australian Dollar losses occurred following the publication of retail sales figures.
Retail sales were expected to have risen by 0.4% on a month-on-month basis in August but they actually only climbed by 0.1%, indicating that consumer demand might not be strong enough to support Australia’s continued economic growth as mining production wanes.
In the opinion of economist Joshua Williamson; ‘With unemployment expectations remaining high, a pickup in consumer spending is unlikely. The economic rebalancing remains delicate and still requires accommodative policy.’
The Australian Dollar fell as low as 86.63 US cents after the report was published.
Australian Dollar Exchange Rate Forecast
The commodity-driven currency failed to derive any support from China’s Manufacturing PMI for September, which remained at 51.1. There had been expectations that the gauge of manufacturing would be revised to 51.
Australia’s Commodity Index for September fell from a negatively revised 89.1 to 87.8
However, during the European session the Pound Sterling to Australian Dollar (GBP/AUD) exchange rate pared gains as the UK’s Manufacturing PMI came in slightly below forecast levels.
Today’s US ISM Manufacturing gauge could impact the USD/AUD exchange rate.
As the week progresses Australia’s trade balance stats could provoke additional ‘Aussie’ movement.
The Pound to Australian Dollar exchange rate is currently trending in the region of 1.8562
The US Dollar to Australian Dollar exchange rate is currently trending in the region of 1.1508
The Australian Dollar advanced broadly against both the Pound and US Dollar on Thursday after it found support from the release of positive domestic economic data and as the market deemed the US Dollars recent rally to have been overdone.
According to the Australian Statistics Bureau, the number of building approvals made in Australia increased sharply by 3%, beating economist expectations for an increase of 1%. Building approvals from the previous month however were revised lower to a gain of 2.1% from 2.5%.
The ‘Aussie’ is likely to experience more movement later in the session depending on how the days US economic data comes in.