The Australian dollar is in the red zone this week as poor Chinese data caused investors to lose faith in the Aussie. Increasing unemployment in the region is also causing investors to back down from this major currency. All eyes are on the upcoming economic data to save the Aussie.
Coming up, the People's Bank of China (PBoC) is going to announce its interest rate decision. The rate was previously at 3.65%, and any change will have a direct impact on the AUD markets. This is because Australia and China are major trade partners in the commodity business.
We are expecting the release of the Reserve Bank of New Zealand (RBNZ_ interest rate decision next week as well. The current rate is 5.25%, and analysts expect it to jump to 5.5%. This will be a busy week for New Zealand as they are also going to release their retail sales data.
Finally, the FOMC meeting minutes will come out on Wednesday and will help investors understand the reasoning behind the monetary policy decisions being made. This data may cause volatility in the USD markets, including AUD/US which closed out the week at 0.6649.
AUD/CAD
The Australian dollar to Canadian dollar exchange rate, AUD/CAD pair has been in a steady decline this week as the Aussie struggles to pull out positive economic numbers. The pair started off at a high of 0.903 but quickly went downhill to 0.893. The pair ended the week at a solid 0.897.
Australia released their unemployment data which revealed an increase as compared to previous numbers. The rate was previously at 3.5%, and it is now at 3.7%. The rising inflation is causing businesses to shut down, which has caused significant unemployment.
On the other side of the world, Canada’s consumer price index came out better than expected. The numbers were previously at 4.3%, and analysts predicted it to drop to 3.9%. However, it maintained its value at 4.1%, which was surprising for the Loonie.
EUR/AUD
This week, we had strong economic data releases that impacted both the Aussie and the Euro. The EUR/AUD chart has shown instability as both currencies battle it out for the top spot. The pair had seen a weekly high of 1.635 and a weekly low of 1.620.
Chinese retail sales data reveal numbers that came out lower than expected. This is bad news for the AUD as it depends on the Chinese consumer appetite for its exports to China. Analysts predicted the sales to come out at 21%, but they dropped to 18.4%.
Officials at the ECB have taken a more aggressive stance on interest rate tightening thus far. According to De Guindos, even if most of the tightening has been completed, there is still room for more rate rises. However, he emphasised that inflation in services continues to be a significant issue and that it would be actively monitored for the remainder of 2023.
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Chris Broadfoot
CB3 Global Payments