Early in the session the ‘Aussie’ ticked higher against the Pound, US Dollar and some other peers before once again tumbling downwards to a four year low.
“It’s a case of the market sells off on bad news and then doesn’t really rally much on good news, which I think tells you most about what you need to know about the psychology of the market, which is still very heavily skewed against the Australian Dollar,” National Australia Bank’s co-head of FX strategy Ray Attrill said.
The currency fell after the latest data release out of China showed that the world’s second largest economy and Australia’s biggest trading partner saw its manufacturing sector contract unexpectedly in January.
According to the HSBC Holdings Plc and Markit Economics PMI for Chinese manufacturing, the index fell to 49.6, below the previous reading of 50.5 and the 50 level that indicates growth. Concerns over China’s economic growth also added pressure onto the ‘Aussie’. GDP in the nation is expected to slow to 7.6% in the first quarter of the year, down from the previous reading of 7.7%.
“That spooked a few participants, that’s why we’ve seen the Australian Dollar fall away in the session; we’ll probably see commodity prices fall way too and that might add a bit more downward pressure on the ‘Aussie’,” said a currency strategist at Commonwealth Bank.
The Melbourne Institute said its inflation expectations rose to 2.3% in December, from 2.1% in November. Expectations are now higher that the Reserve Bank of Australia will choose to keep interest rates at 2.5% until at least June.
Current Australian Dollar Exchange (AUD) Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.8801 ,
Australian Dollar,,British Pound,0.5304 ,
Australian Dollar,,Euro,0.6456 ,
Australian Dollar,,New Zealand Dollar,1.0586 ,
[/table]
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