The Australian dollar is tumbling versus the US dollar on Thursday. The pair is currently down 0.8% on the day, having struck a nadir of US$0.6782. This is the lowest level that the pair has traded at in almost a month.
Poor data from China and Australia overnight is pulling the Aussie dollar lower. Data showed that Australian employment suffered its sharpest decline in 3 years in October. New jobs fell by -19,000 and the unemployment rate nudged higher to 5.3%. analysts had been expecting 15,000 new jobs to have been created and unemployment remain steady at 5.2%.
The weak data underlines the need for further action from the Reserve Bank of Australia, which has already cut interest rates three times this year. The interest rate is currently at a record low of 0.75%. The RBA is in a wait and see mood. This data could impact their decision. The prospect of interest rates being cut further sent the Australian dollar tumbling.
Adding to the Australian dollar’s woes, Chinese data was also off the mark. Chinese industrial production came in a 4.7% year on year growth, well short of the 5.4% that analysts had forecast, in the latest piece of evidence that the US — China trade dispute is negatively impacting the world’s second largest economy.
The Australian dollar is a proxy for China. The worsening picture of the Chinese economy sent the Aussie dollar lower.
There is no high impacting Australian data due for releases today. US — China trade headlines will remain in focus.
Dollar Rallies Owing To Safe Haven Properties
Uncertainty over US — China trade talks and the prospect of a phase one deal is boosting the dollar on Thursday. Investors are seeking the safety of the world’s reserve currency. Mixed messages from President Trump earlier in the week unnerved investors as he said that a deal with China could be soon but also mentioned that more tariffs could be on the way if a deal wasn’t agreed. The talks struck another snag today, this time over agriculture purchases. Investors are growing increasingly sceptical over how much progress is being made to a phase one deal.
Later today Federal Reserve Chair Jerome Powell will appear for a second time before Congress. Yesterday, there wee no surprises from his comments, as he said the policy was appreciate for the risk outlook. Investors are not expecting a rate cut from the Fed in December.
| What do these figures mean? |
| When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.
For example, it could be written: 1 USD = 0.6784 AUD Here, $1 is equivalent to approximately A$0.67. This specifically measures the US dollar’s worth against the Australian dollar. If the Aussie dollar amount increases in this pairing, it’s positive for the US dollar. Or, if you were looking at it the other way around: 1 AUD = 1.4739 USD In this example, A$1 is equivalent to approximately $1.47. This measures the Australian dollar’s worth versus the US Dollar. If the US dollar number gets larger, it’s good news for the Aussie dollar. |
