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Disappointing data put a lid on the Aussie

H.S. Borji
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Disappointing data put a lid on the Aussie

The Australian dollar declined sharply against its US counterpart for a second consecutive day, as weak fundamentals continue to dampen the commodity currency’s outlook.

The AUDUSD plummeted 0.8 percent to 0.8701 after declining more than 100 pips on Thursday. The pair, which touched an intraday low of 0.8693, is supported at 0.8681. On the upside, resistance is ascending from 0.8867.

The Australian dollar tumbled against the Canadian loonie, as the AUDCAD fell 0.6 percent to 0.9763. The pair faces initial support at 0.9731 and resistance at 0.9886.

The Aussie also suffered fresh losses against its Pacific crosses. The AUDJPY tumbled 0.8 percent to 93.95. The pair is likely supported at 93.95, with initial resistance at 95.56.

The AUDNZD declined 0.3 percent to 1.1134 after touching an intraday low of 1.1128. The pair is currently testing the initial support level. On the upside, resistance is ascending from 1.1196.

In economic data, Australian housing figures hit a soft patch in August, as home loans and investment lending for homes declined.

Home loans unexpectedly fell 0.9 percent, following a gain of 0.3 percent in July, the Australian Bureau of Statistics reported today. Economists forecast a gain of 0.1 percent.

Investment lending for homes declined 0.1 percent in August, following a gain of 5.6 percent the previous month.

Australia’s labour market took a step back in September, official data revealed Thursday. Overall employment declined 29,700, the ABS reported. The unemployment rate edged up to 6.1 percent while workforce participation declined.

The government’s statistics branch also retracted its employment data for July and August, which showed huge swings in the unemployment rate. According to the ABS, the unemployment rate remained steady at 6 percent in those months. It had previously stated that unemployment surged to 6.4 percent in July, a 12-year high, before falling again to 6.1 percent in August on the heels of the strongest pace of job creation since records began in 1978.

The ABS is not the only national institute to make big revisions to its jobs data. Earlier this year Statistics Canada came under heat after it retracted its July employment numbers due to an “error” in the initial estimate.

Domestic uncertainty and global growth concerns will continue to weigh on the Australian dollar, which is still too high according to the Reserve Bank of Australia. The exchange rate “remains high by historical standards, particularly given the further declines in key commodity prices in recent months,” according to the RBA, which left its cash rate unchanged on Tuesday for the fourteenth consecutive month.

As an export-driven currency, the Australian dollar was also impacted by a gloomy growth outlook from the International Monetary Fund. The international lending institution revised its growth outlook this year to 3.3 percent from 3.4 percent, and said the global economy will grow only 3.8 percent next year. The 2015 estimate was revised down from 4 percent.

The IMF expects Australia to grow 2.8 percent this year and 2.9 percent in 2015, but also believes it will have the worst unemployment rate in the Asia-Pacific region during this period, with the exception of the Philippines.

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