The Australian dollar has fallen sharply across the European session again on Tuesday. The Australian dollar US dollar exchange rate has tumbled 1% and is trading at US$0.6890 at the time of writing. This is the fourth straight session of losses for the Aussie dollar, which is down over 2.2% since the beginning of January
The Australian dollar is under pressure as investors become increasingly concerned over the economic outlook for Australia. The Australian wildfires continue to burn and are expected to weigh heavily on the Australian economy.
Also affecting sentiment towards the Aussie dollar was Australian data. The ANZ Job Advertisement Index for Australia, a leading indicator for the closely watched Australian employment numbers, declined by 6.7% in December. This is a sharp drop for the index, which hasn’t suffered such a steep negative decline since June last year. The trend in employment was already looking negative and something that the RBA was anticipating. However, it would appear that the wildfires are adding further gloom to the outlook for the Australian labour market.
Investors will continue monitoring the wildfire situation closely. In the meantime, attention could switch towards Australian construction data and Westpac consumer confidence data due later today.
US Dollar Investors Look To ISM Non-Manufacturing Data
The dollar is pushing higher in the European session after a weak close on Monday as investors shrug off Iran – US threats and focus on the expected signing of the US – China stage one trade deal next week. Data from the US has shown that the US manufacturing sector is in contraction owing to the trade dispute. The signing of the phase one deal could help global demand pick up, boosting US manufacturing. This would be good news for the US economy.
Today attention will now turn towards the US ISM non-manufacturing data. Given that the service sector is the most dominant sector of the US economy, the data is closely watched. Analysts are expecting an increase to 54.5 in December, up from 53.5. A strong report could lift the US dollar higher.
|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.