The Pound Sterling to Australian Dollar (GBP/AUD) exchange rate firmed on Monday to hit a session high of 1.966
Chinese Imports Slump
Disappointing trade data out of China caused the Australian Dollar to fall against the majority of its most traded peers and the release of mixed domestic employment data offered little support. The Chinese data adds to signs that the world’s second largest economy is slowing, and reduced demand for riskier assets.
According to the report, Chinese imports and exports both came in worse than forecast and the nation’s monthly trade surplus soared to $60 billion due to the sharp decline in imports.
Chinese exports fell by 3.3% in January from the preceding year whilst imports tumbled by 19.9%. Importantly for Australia, demand for iron ore and crude oil imports declined by 9.4% and 0.6%.
‘The Australian Dollar was the hardest hit after disappointing Chinese trade data, although we caution that some distortions to the data make interpretation difficult. These include the timing of Chinese New Year- late January 2014 and mid-February this year. That being the case, we should wait until the February data to get a better picture,’ said RBC senior currency strategist Sue Trinh.
Domestic data released early in the session showed that the number of newspaper job advertisements fell by 6.7% last month, wiping out the 0.3% gain seen the preceding month. Internet job adverts rose by 1.5%, down from December’s rise of 1.8%.
The ‘Aussie’ did not find support after Australian Prime Minister Tony Abbot survived a challenge to his leadership over the weekend.
‘When you elect a government, when you elect a prime minister, you deserve to keep that government and that prime minister until you have a chance to change your mind. So the focus now is once more on jobs, families, a stronger economy and a secure nation,’ said Tony Abbot.
The data suggests that Australia’s economy and labour market is weakening.
European Worries Weigh
The Australian Dollar and other riskier assets were also under pressure from concerns over the standoff between Greece and the wider European Union as well as worries over the conflict in Ukraine.
Greek Prime Minister Alexis Tsipras announced that he is sticking to his promise to get rid of austerity measures and rejected an international bailout extension. He told parliament that he would keep all of the pledges made in the general election, something that will set him on a collision course with Germany and the Troika.
