Australian dollar falls to post-GFC low
Daily Currency UpdateThe Australian dollar is weaker this morning falling to an overnight low of 0.6794 declining for a tenth consecutive day, its lowest level in a decade, as the escalation of the trade war overshadowed it all. Following the US Federal Reserve’s decision to proceed with a 25bps rate cut President Donald Trump said on Thursday he will expand tariffs to virtually all imports from China on September 1, marking a significant escalation in a more than yearlong trade war between the largest economies.
On the data front yesterday we saw the release of AIG Performance of Manufacturing Index which came in at 51.3, better than the previous 49.3, while the Commonwealth Bank Manufacturing PMI for July resulted at 51.6, better than the 51.4 forecast. Looking ahead today and all eyes are on Monthly Retail Sales at 11.30am.
From a technical perspective, the AUD/USD pair is currently trading at 0.0.6801. We continue to expect support to hold on moves approaching 0.6790 while now any upward push will likely meet resistance around 0.6820.
Key MoversMarkets were again moving off comments overnight from President Donald Trump following an additional 10% tariffs on $300bn in Chinese products due to come into effect next month. The DXY pulled off from 2019 highs as traders moved back into safe haven currencies such as the Japanese yen and Swiss franc. USD/JPY plummeted from 1.0930 to a low this morning of 1.0730 as trade negotiations between United States and China continue to simmer.
The Bank of England kept their official bank rate at 0.75% at this month’s monetary policy meeting overnight. The GBP dropped to a 2 ½ year low of 1.2080 despite barely moving following the release of monetary policy meeting minutes. The central bank cut growth forecasts as ongoing uncertainty of a favourable Brexit continues to weigh on the British economy. Rates are not guaranteed to be cut should there be a no-deal Brexit as the MPC voted 9-0 to keep rates unchanged at 0.75%.
A raft of data including non-farm employment figures & trade balance is due for release this evening in the United States and is likely to dictate direction into the close of trade for the weekend.
- AUD/USD: 0.6750 - 0.6870 ▼
- GBP/AUD: 1.7500 - 1.8000 ▲
- AUD/NZD: 1.0300 - 1.0440 ▼
- AUD/EUR: 0.6100 - 0.6200 ▼
- AUD/CAD: 0.8920 - 0.9040 ▼