Concerns that the ‘Aussie’s 2013 declines were excessive saw the currency recover ground against several of its major rivals last week and post a five-day gain against the US Dollar.
During Australasian trading the commodity-driven currency gave up gains against the ‘Greenback’ in response to less-than-impressive Chinese and Australian data.
Australia’s AiG performance of service index fell from 48.9 in November to 46.1 in December, in another sign that the nation’s economy is really feeling the strain.
Meanwhile, China’s HSBC/Markit Services PMI dropped from 52.5 to 50.9 in December.
As China is Australia’s main trading partner the result dampened the latter nation’s economic outlook and lessened the appeal of the ‘Aussie’.
But it wasn’t all negative news. In a comment issued with the service figures economist Hongbin Qu stated; ‘Despite the moderation of the headline China Services PMI index, which reflected slower new business growth, labour market conditions improved for the fourth month in a row. We expect the steady expansion of manufacturing sectors to lend support to service sector growth.’
However, the poor services result does follow last week’s disappointing manufacturing figure for China.
The South Pacific asset edged down against the US Dollar but managed to advance on the Pound as the British currency was adversely affected by UK developments.
The Pound posted widespread declines as a Treasury Statement showed that Chancellor of the Exchequer George Osborne believes further UK spending cuts are necessary.
Osborne was quoted as saying; ‘We’ve got to make more cuts. There’s still a long way to go, and there are big, underlying problems we have to fix in our economy.’
Sterling subsequently faltered against the Australian Dollar and consolidated losses as UK services PMI showed an unexpected slowing in the pace of expansion.
The ‘Aussie’ was also supported against its British peer by the expectation that this week’s domestic retail sales report will show a fifth month of increasing sales.
As the week continues GBP/AUD movement is likely to be driven by Australian trade balance, performance of construction and retail sales figures. UK trade balance and manufacturing/industrial production reports will also be of interest, as will the Bank of England’s rate decision on Thursday.
Current Australian Dollar Exchange (AUD) Rates
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The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.8940 <
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6577 <
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5469 >
The Australian Dollar/ New Zealand Dollar Exchange Rate is currently in the region of: 1.0834 >
The US Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.1183 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.5174 <
The Pound Sterling /Australian Dollar Exchange Rate is currently in the region of: 1.8273 <
The New Zealand Dollar/Australian Dollar Exchange Rate is currently in the region of: 0.9226 <
Correct as of 10:10 GMT
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