The Australian was little moved against the Pound on Monday and is forecast to make relatively little movement against its major peers due to a lack of domestic economic data releases.
Last week’s positive manufacturing PMI data out of the United States offered the ‘Aussie’ some support over the weekend but that was countered by an earlier report out of China which showed that the world’s second largest economy and Australia’s biggest trading partner saw manufacturing activity slumped to a seven month low.
The ‘Aussie’ remains under pressure from reports last week which showed that the price of iron ore (Australia’s biggest commodity export) declined due to speculation that China has a large surplus of the steelmaking material.
“At face value it looks like it’s going to put downward pressure on iron prices, and its coming at a time when some other data are suggesting that the Chinese economy is slowing down. The market should presume it’s a negative risk for iron ore prices and the Australian Dollar,” said a strategist at RBS.
Some support was offered over the weekend by an improvement in risk sentiment after the interim Ukrainian Parliament voted to remove President Viktor Yanukovich from power. The government has indicated that it wants the country to integrate further with Europe.
The currency is expected to decline over the next few months and Deutsche Bank forecast that the ‘Aussie’ could fall to as low as 66 cents to the US Dollar over the next two years. Continuing softer data reports out of China and a slowdown in the Australian economy could see that happen.
Analysts say China’s disappointing figures and worst than anticipated local job figures released earlier this month continue to erode confidence in the Australian economy. Unemployment in Australia also rose to 6%, the highest level since 2003.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.8985 ,
Australian Dollar,, Pound Sterling,0.5406 ,
Australian Dollar,,Euro,0.6531 ,
Australian Dollar,,New Zealand Dollar,1.0824 ,
US Dollar,,Australian Dollar,1.1130 ,
Pound Sterling,,Australin Dollar,1.8526 ,
[/table]
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