The Australian dollar is under pressure

Scott Barbour/Getty Images
  • The Australian dollar remains under pressure, falling to fresh multi-month lows against the greenback.
  • Increased risk aversion and a plunge in the euro helped lift the US dollar Index to the highest level since December.
  • The euro tumbled to levels not seen in close to two years, thanks to the ECB.
  • Chinese trade data will be released today. The main highlight overall will be the release of US non-farm payrolls.

The Australian dollar is under pressure, falling to fresh multi-month lows against the greenback on Thursday.

Here’s the scoreboard at 8.10am in Sydney on Friday.

AUD/USD 0.7010 , -0.0022 , -0.31%
AUD/JPY 78.25 , -0.33 , -0.42%
AUD/CNH 4.7205 , -0.0021 , -0.04%
AUD/EUR 0.6264 , 0.0046 , 0.74%
AUD/GBP 0.5361 , 0.0022 , 0.41%
AUD/NZD 1.0381 , -0.0004 , -0.04%
AUD/CAD 0.9433 , -0.0018 , -0.19%

The main story of the session was the euro which tumbled to the lowest level since June 2017, undermined by dovish commentary and economic forecasts from the European Central Bank (ECB) following its March monetary policy meeting. The ECB also surprised by announcing a new round of cheap loans to euro-area banks, something that was not expected to occur at its March meeting.

“[The] EUR/USD declined… after the ECB lowered its economic forecasts, pushed out its forward guidance, introduced more easing measures, and maintained the view that downside risks dominate the economic outlook,” said Richard Grace, Chief Currency Strategist at the Commonwealth Bank.

“The ramifications of slower economic growth, further policy easing, and a delay to raising interest rates lowered Eurozone and US treasury yields by four to six basis points.

The dovish shift from the ECB also sparked renewed concern about the outlook for the global economy, something that weighed on risk assets during the session.

“ECB President Draghi admitted that policy options for the ECB were limited and that some economic forces were outside of its control,” said David de Garis, Economist at the National Australia Bank.

The dovish turn from the ECB saw the EUR/USD tumble to as low as 1.1177, lifting the broader US dollar Index (DXY) to the highest level since mid-December last year.

The strength in the greenback subsequently weighed on the Aussie dollar, sending the AUD/USD sliding back towards the .7000 level.

At .7010, the AUD/USD currently sits at the lowest level since January 4 this year.

Investing.comAUD/USD 4-Hour Chart

Turning to the day ahead, all attention today will be offshore with no major Australian economic data releases of note.

In Asia, the main event will come from China with the release of trade data for February midway through the session. A trade surplus of $US26.4 billion is expected. It’s also worthwhile reminding at this point that the timing of Lunar New Year celebrations in China often creates unusual movements in Chinese data at this time of the year.

The Japanese economic calendar is also busy with revised Q4 GDP, household spending and average cash earnings data all on tap.

Later in the day, the undisputed headline act will be the release of February non-farm payrolls data in the United States.

Currency markets will take their near-term cue from the non-farm payrolls report,” says Grace at the CBA.

“Key will be the level of the unemployment rate, rather than the number of jobs generated. The US unemployment rate, since troughing at 3.7% in September, has lifted to 4.0%. Consensus is a decline to 3.9%.”

Outside of the US jobs report, other highlights include German factory orders, French trade and industrial production, Canadian unemployment along with building permits, housing starts and wholesale inventory data from the United States.

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