The Australian Dollar to US Dollar (AUD/USD) exchange rate softened by almost 0.6% on Monday as investors responded to a run of Australasian reports.
Last week the ‘Greenback’ was bolstered by the Federal Open Market Committee’s decision to bring its quantitative easing programme to an end. The US Dollar’s strength persisted after the US released better-than-expected growth data and the North American asset held gains against rivals like the ‘Aussie’ over the weekend.
The weakness in the AUD/USD exchange rate was also due to disappointing Australian building approvals figures.
The number of building approvals issued in the nation fell by a whopping -11.0% on the month in September. A more moderate dip of -1.0% had been expected.
In the view of economist Tom Kennedy; ‘It’s a lot weaker than we had expected, but if you’re looking for the good news, it’s that the bulk of the weakness was in the high-density component. That category is often volatile and is prone to having large downturns and large spikes. We think it’s more or less an aberration and we think we’ll see it bounce back in the next few months. It’s not a good number but it’s probably not as alarming as the headline would suggest.’
Other reports showed an increase in Australia’s AiG Performance of Services index (from 46.5 to 49.4) and a 0.2% rise in job advertisements. China’s Non-Manufacturing PMI softened while the nation’s final Manufacturing PMI was unchanged from the flash figure.
Additional AUD/USD exchange rate movement is likely to occur during the North American session.
US Construction Spending is believed to have increased by 0.7% on the month in September following the -0.8% decline recorded in August.
However, the day’s big figure is the US ISM Manufacturing report. A decline could have a detrimental impact on the US Dollar and help the ‘Aussie’ recover some of its losses.
The Australian Dollar to US Dollar (AUD/USD) exchange rate is currently trending in the region of 0.8748.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate began the European session in a softer position as investors dwelt on Australia’s disappointing building approvals report.
AUD/GBP declines were extended after the UK published an unexpectedly positive manufacturing figure.
Economists had forecast that the UK’s Markit Manufacturing PMI would soften to 51.4 in October from 51.6 in September. In actuality, the measure rallied to 53.2 – a three month high.
According to Markit economist Rob Dobson; ‘Although the pace of expansion remains below that seen at the start of the year, suggesting the sector will remain only a modest contributor to broader economic growth, it is positive to see the sector break its recent sequence of slower growth. Continued growth of employment, especially at SMEs, suggests that the recovery in the labour market is holding sway.’
With the Bank of England scheduled to deliver its interest rate decision later in the week, the encouraging result helped the Pound strengthen against the Australian Dollar, Euro, US Dollar and New Zealand Dollar.
In light of the fact that Australia is scheduled to publish domestic retail sales figures overnight, additional AUD/GBP movement is likely. The Reserve Bank of Australia will also be delivering its interest rate decision at 03:30 GMT.
The Australian Dollar to Pound Sterling (AUD/GBP) exchange rate is currently trending in the region of 0.5469.
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