- AUDUSD Extends Declines As Risk Aversion Saps Carry Demand
- Aussie Left Vulnerable As Rate Hikes Look Increasingly Distant
- Geopolitical Tensions May Pose A Short-Term Threat To The AUD
The Australian Dollar extended its recent declines over the past week
on the back of broad-based risk aversion and disappointing domestic
data. Heightened geopolitical turmoil sapped demand for the
high-yielding currency as traders flocked to the perceived safety of
the Yen and US Dollar. Additional pressure was put on the currency
following an unexpected jump in the local unemployment rate to a 12
year high.
Consumer and business confidence figures are the only noteworthy
pieces of domestic data on the calendar over the coming week. The
leading indicators for the health of the local economy have reflected
some resilience in recent months, yet remain subdued. Another
lackluster set of readings would further reinforce the need for highly
accommodative RBA policy to remain in place.
Upcoming Chinese Retail Sales and Industrial Production data will also
be on the radar for Aussie traders. Incoming data from the Asian giant
has been relatively positive on balance, which has eased concerns over
a deceleration in economic growth. If the next week’s figures continue
this recent trend it could ease some of the selling pressure facing
the AUD.
AUD/USD is drawing closer towards the 92 US cent handle, which has
been a line in the sand for the pair since late March. If broken, it
would set the stage for a sustained decline to the
psychologically-significant 0.9000 handle. Refer to the US Dollar outlook for insights into how the USD side of the equation may influence the pair.
