- Australian Dollar (AUD) plunges after retail sales decline -4.2% MoM
- PMI data was more encouraging but failed to lift Aussie Dollar
- US Dollar (USD) trades high despite mixed PMI data
- Federal Reserve Chair due to testify before Congress
The Australian Dollar US Dollar (AUD/USD) exchange rate is trading over 1% lower on Wednesday: its fourth day of losses. The pair settled -0.7% at US$0.7174 in the previous session. At 14:30 UTC, AUD/USD trades -1% through US$0.71.
Australian Dollar was out of favour across the day following unexpectedly weak retail sales data. Australian retail sales tanked -4.2% in August month on month. The state of Vitoria saw the biggest decline in sales owing to renewed lockdown restrictions and a second wave of coronavirus in the state.
According to the data from the Australian Bureau of Statistics the state of Victoria saw large declines in sales across industries except for food as a strict lockdown conditions saw many businesses temporarily close. The data comes after several months of strong sales after the economy showed signs of recovering following the initial coronavirus hit.
Australian PMI data for the services and the manufacturing sector was better than expected. With the service sector hit 50 on the PMI gauge, whereby 50 separates expansion from contraction. Activity in the manufacturing sector expanded at a faster rate than forecast at 55.5 Analysts had been predicting that the sector would fall back into contraction.
There is no Australian economic data due for release on Thursday.
The US Dollar is extending gains versus its major peers despite mixed data. September PMI data showed that expansion in the manufacturing sector gained momentum in September with the PMI advancing to 53.5. However, the service sector showed signs of the economic recovery slowing. The services PMI printed at 54.6 in September, down from 55.
Attention will now turn to US Federal Reserve Chair Jerome Powell as he appears before Congress for the final time this week. Jerome Powell is expected to push for further fiscal spending to help boost the US economy.