The Australian dollar hits a 6-month low

Hannah Peters/Getty Images

The Australian dollar has fallen to a six-month low against the greenback, slicing through previous support in overnight trade.

Here’s the scoreboard as at 8am AEDT.

AUD/USD 0.7512 , -0.0051 , -0.67%
AUD/JPY 84.93 , 0.01 , 0.01%
AUD/CNH 4.9747 , -0.0294 , -0.59%
AUD/EUR 0.6379 , -0.0031 , -0.48%
AUD/GBP 0.5574 , -0.0073 , -1.29%
AUD/NZD 1.0995 , 0.001 , 0.09%
AUD/CAD 0.9652 , -0.0015 , -0.16%

After opening the session buying .7563, the AUD/USD was hammered lower by a combination of soft Australian trade data for October, a plunge in iron ore markets and a firmer US dollar, seeing it hit a low of .7506, the lowest level since June 7.

“The Aussie dollar is threatening a test of the psychological 75 cents levels, having taken its second big hit of the week yesterday on very disappointing trade data, this following on the heels of the weak consumption data contained within Wednesday’s GDP numbers,” said Ray Attrill, Head of FX Strategy at the National Australia Bank.

“Weakness in iron ore exports was the main culprit. Overnight we’ve seen a sharp fall in iron ore futures prices on the Dalian exchange (down around 4%) and this looks to have added a bit more insult to injury.”

Adding to the Aussie’s woes, the US dollar continued to rally on the back of reports that US President Donald Trump is confident that he can strike a deal to lift the US debt ceiling, avoiding the prospect of a government shutdown in the days ahead.

Combined, that’s seen the Aussie slide 0.67% for the session, extending its decline from mid-September to 7.5%.

AUD/USD Daily Chart

The Aussie also lost ground against the euro, Canadian dollar and UK pound with the slide against latter particularly pronounced as reports emerged that Ireland and the UK were moving closer to striking a deal on the Northern Ireland border, allowing trade negotiations with the EU to proceed.

Turning to the day ahead, the Aussie’s movements will likely be determined by the release of major economic data from China and the US later in the session.

Chinese trade data for November will be released after 1pm AEDT with markets looking for annual growth in exports and imports of 5% and 11.3% respectively in US dollar terms, down from 6.9% and 17.2% in October.

The trade surplus is tipped to narrow to $35 billion, down from $38.17 billion a month earlier.

Before that report hits, markets will also receive Australian housing finance data for October at 11.30am AEDT. Japan will also release revised Q3 GDP data at 10.50am AEDT.

Neither report is likely to generate any volatility in the Aussie.

Later in the session, the headline act will be the release of US non-farm payrolls for November at 12.30am AEDT. According to Thomson Reuters, economists are looking for an increase in payrolls of 200,000, leaving the unemployment rate steady at 4.1%.

Perhaps of more importance given its implications for inflationary pressures, average hourly earnings are tipped to grow 0.3% following a flat outcome in October. If that eventuates, it will leave the annual increase at a solid 2.7%.

“They’ll be as much or more interest in the earnings data and unemployment rate as the headline non-farm payrolls numbers,” says Attrill at the NAB.

While the payrolls report will dominate the second half of the session, other data releases of note include German trade, French industrial output, construction volumes, industrial output and goods trade balance from the UK along with Canadian housing starts.

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