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Aussie Tumbles ahead of Key Data

H.S. Borji
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Aussie Tumbles ahead of Key Data

The Australian dollar tumbled against its US counterpart on Monday, as investors shifted their attention to a slew of Australian data later in the week.

The AUDUSD tumbled 0.91 percent to 0.9280, an intraday low. The pair faces immediate support at 0.9340 and resistance at 0.9411.

The Aussie tumbled against the New Zealand dollar, as the AUDNZD declined 0.42 percent to 1.1212. The pair faces immediate support at 1.1194 and resistance at 1.1288.

The Aussie-to-yen exchange rate tumbled 0.15 percent to 98.41. The pair faces initial support at 98.31 and resistance at 98.75.

Meanwhile, the US dollar continued to surge on Monday, as geopolitical tensions supported safe haven assets. The US dollar index, a weighted average of the US dollar’s performance against six major currencies excluding the Aussie, advanced 0.65 percent to 84.29.

Australia and the US had no major data releases scheduled for Monday, as investors shifted their attention to a more active Tuesday session.

The National Australia Bank will release its business confidence index on Thursday. Business confidence reached a one year high in July, rebounding from its post-budget slowdown. However, confidence levels varied by sector and were generally weaker outside of construction and retail.

Separately, the Australian Bureau of Statistics will produce data on home loans and investment lending for homes, key gauges of overall housing activity. On Wednesday Westpac will release its monthly consumer confidence index, which monitors consumers’ outlook on the economy and personal finances.

The week’s biggest release comes Thursday when the ABS reports on Australia’s employment situation. Australia’s economy shed 300 jobs in July, as gains in part-time work overshadowed growth in part-time employment. However, the jobless rate surged to 6.4 percent from 6 percent, a 12-year high.

July marked the first time since 2007 Australia’s jobless rate was higher than the US.

The Aussie failed to rally despite stronger than forecast Chinese trade data. China’s trade surplus increased to $49.83 billion in August, as exports rose 9.4 percent, the country’s national statistics bureau revealed today. Economists forecast a narrowing of the surplus to $40 billion.

The Chinese government will produce several high profile data releases this week, including new loans, consumer inflation and industrial production.

The Reserve Bank of Australia likely views the Aussie’s recent skid as a positive development for the economy, which is suffering from a broad slowdown in the resources sector. According to the RBA’s latest monetary policy statement, resource sector investment is “starting to decline significantly.”

The central bank held interest rates at 2.5 percent at the September policy meetings, which took place last week. RBA Governor Glenn Stevens said the central bank will probably keep rates at historic lows for the time being.

A stronger local currency is considered a drag on economic growth, hampering Australia’s export sector and weighing on income growth. The “stubbornly high” Aussie also appears to have discouraged investment in non-mining activity, according to analysts.

The RBA is forecasting “below trend” economic growth in the year ahead, as investment intentions gradually improve throughout the economy.

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