During the Australasian session the Australian Dollar declined against peers like the US Dollar, Pound and Euro as investors responded to yet more disappointing data from China – the world’s second largest economy and Australia’s main trading partner.
The AUD/USD exchange rate had previously advanced in response to sub-par US Retail Sales figures.
The fact that the pace of retail sales growth in the world’s largest economy failed to rally by as much as forecast was taken as bearish signal for US interest rate hike projections and the ‘Greenback’ accordingly weakened against a number of its currency counterparts.
As stated by industry expert Stephen Innes; ‘Currency markets were in consolidation mode leading up the US retail sales data, and on the soft print, investors engaged in profit-taking by unwinding their long positions on the ‘Greenback’ when the data didn’t meet their lofty expectations. As a result, the Aussie moved to the upper end of the current range (.7650). This has been typical of the recent US Dollar selloff, as traders quickly fade or buy ‘Greenbacks’ on these mini reversals.’
However, the Australian Dollar to US Dollar (AUD/USD) exchange rate’s advance was put in jeopardy as China published another batch of concerning ecostats.
Following on from the unexpectedly poor Chinese trade report released earlier in the week, China’s industrial production and retail sales reports printed well below predicted levels and demand for commodity-driven currencies like the ‘Aussie’ was compromised accordingly.
Before the reports were released, Innes added; ‘The future of the Aussie and Kiwi dollars hangs on Chinese data. Traders’ attentions will be acutely focused on this morning’s China gross domestic product and industrial production numbers ahead of tomorrow’s highly anticipated Australian employment data.’
After hitting a low of 0.7567, the AUD/USD exchange rate was able to return to trending around the 0.7626 level as the US Industrial Production number fell short.
Economists had predicted a -0.3% decline in March, but industrial output actually fell by -0.6%.
US Dollar losses were tempered by an uptick in the US NAHB Housing Market Index, which rose from 52 to 56.
The Australian Dollar is likely to experience notable movement over the course of the local session as Australia releases domestic employment figures for March.
A solid employment gain, and perhaps a dip in the unemployment rate, would be ‘Aussie’ supportive. However, any causes for concern would trigger Australian Dollar losses.
During European trading the Australian Dollar to US Dollar (AUD/USD) exchange rate was trending in the region of 0.7630.
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