Ahead of the release of Australia’s employment figures for February the Australian Dollar broadly declined as commodity prices slumped amid Chinese economic concerns.
Dipping copper prices and the expectation that China’s slowdown will worsen in the near future piled pressure on the ‘Aussie’ and the AUD/GBP pairing declined further as the Westpac consumer confidence report for Australia slumped unexpectedly.
The less-than-impressive 99.5 reading for March prompted this response from one well-placed industry expert; ‘The initial declines in December-January looked to be mainly the unwinding of the election-related sentiment boost. More recent falls though have had a very clear theme centring on a sharp loss of confidence in the economic outlook and escalating job-loss fears.’
While a lack of UK data limited additional AUD/GBP movement, tomorrow’s Australian jobs report will be integral for deciding what direction the pairing takes over the rest of the week.
Job creation has been one of the Australian economy’s weakest areas in recent months, and unemployment hit an over ten year high of 6 per cent in January.
If February’s figures don’t show some improvement the odds of the Reserve Bank of Australia introducing a rate increase before the end of the year will fall and some industry experts may return to bets that the central bank will introduce a rate cut before the close of 2014.
Economists have forecast that the Australian economy added 15,000 positions in February following January’s 3,700 decline.
The unemployment rate is expected to hold at 6.0 per cent with the participation rate being unchanged at 64.5 per cent.
Tomorrow’s UK RICS house price balance figures could also have a modest impact on the AUD/GBP exchange rate before Friday’s British trade data.
Current Australian Dollar Exchange (AUD) Rates
Correct as of 11:55 GMT