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Australian Dollar Soft on Market Sentiment, Weak Economic Data

March 6, 2020 at 16:20 by Vladimir Vyun

A set of AUD100 and AUD50 banknotesThe Australian dollar was soft today. While it managed to gain on the US and Canadian dollars, the Aussie fell against other most-traded currencies. It declined even against its New Zealand counterpart, which is also considered riskier commodity currency. The market sentiment remained in a risk-off mode, weighing on Australian currency, and Australia’s macroeconomic releases were not helping either.

The Australian Bureau of Statistics reported that retail sales fell by 0.3% in January from the previous month on a seasonally adjusted basis. That was a total surprise to market participants, who were expecting a flat reading. Furthermore, the December decline got a revision from 0.5% to 0.7%.

The Australian Industry Group Australian Performance of Services Index fell from 47.4 in January to 47.0 points in February. A reading below 50.0 indicates a contraction of the industry. In fact, it was the third consecutive month of decline. Unsurprisingly, the main reasons for the decline were bushfires and the coronavirus as the report explained:

Respondents to the Australian PSI® said following the disruption to consumer demand and business conditions from bushfires and related smoke pollution, February was close to a return to business as usual but at a reduced level. The most frequently reported concern for businesses was the effect of a possible global pandemic of coronavirus COVID-19.

Talking about the coronavirus, it looks like China managed to slow the spread of the disease. But the deadly COVID-19 infection continues to spread across other countries, South Korea being the biggest center of the outbreak outside of China.

AUD/USD rose from 0.6608 to 0.6633 as of 16:19 GMT today. EUR/AUD advanced from 1.6987 to 1.7072. AUD/CAD rallied from 0.8868 to 0.8912. AUD/NZD tumbled from 1.0488 to 1.0432.

If you have any questions, comments, or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

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