The Australian dollar remains under pressure after suffering one of its largest fall in years

Photo: Miguel Villagran/ Getty.

On the back of continued US dollar strength, elevated risk aversion and another tumble in the iron ore price, the Australian dollar continued to slide in overnight trade, finishing Wednesday’s session buying .7456, the lowest closing level seen since March 15.

It followed a decline of more than 2% on Tuesday — the largest in percentage terms in nearly five years — after the RBA cut interest rates to a record-low level of 1.75%.

According to Rodrigo Catril, currency strategist at the NAB, mixed US data and a soft lead from Asia, reflecting concerns over the global growth outlook, appear to have been the major contributors to the risk off sentiment overnight, something that weighed on the Aussie as a result.

In US data released overnight, the ADP employment report revealed a smaller-than-expected increase in private sector payrolls growth in April, rising by 156,000, the weakest level seen in three years. This was offset by an acceleration in service sector activity levels that topped forecasts. Factory order and trade figures also topped expectations.

At 8am AEST, the AUD/USD buys .7458, down 0.3% on Wednesday’s opening level.

Looking ahead to Thursday’s Asian session, there are plenty of events that have the potential to create volatility, both at home and abroad.

Domestically, markets will receive retail sales and international trade figures for March while the latest Caixin-Markit China services PMI report for April will also be released.

The Australian data will be out at 11.30am AEST, with the Caixin-Markit report following soon after at 11.45am AEST.

With Japanese markets remaining closed, something that will likely ensure thinner-than-normal market conditions, movements in the Japanese yen (USD/JPY) and Chinese yuan (USD/CNY) against the US dollar are also likely to be influential on the Aussie.

Here’s the current Australian dollar scoreboard.

  • AUD/USD 0.7458 , 0.0002 , 0.03%
  • AUD/JPY 79.8 , 0.02 , 0.03%
  • AUD/CNH 4.8580 , -0.0006 , -0.01%
  • AUD/EUR 0.6490 , 0 , 0.00%
  • AUD/GBP 0.5144 , -0.0001 , -0.02%
  • AUD/NZD 1.0831 , -0.0003 , -0.03%

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