The Australian dollar is trading in a narrow range for the last three days, with a slight open higher today in Asia at 0.6418. The Aussie dollar had a 1.4% fall on Friday with Australian jobs data unexpectedly dropping, along with the unemployment rate heading higher. July jobs dropped by 14,644 after an expected rise of +15k and the unemployment rate rising to 3.7% for July. This pulled the Aussie dollar to fresh year lows of 0.6387. There has been limited economic data out of Australia, but the market is keeping a sharp eye on the U.S. Federal Reserve Chair Jerome Powell’s speech at Jackson Hole on Friday, as well as a number of other Fed Reserve interviews this week by several other Fed Officials.
There is some data we will be awaiting out of Australia today with the Flash Manufacturing PMI along with CB Leading Index. Out of New Zealand, Retail Sales is expected to come in just slightly better than the previous month at -0.4 from a -1.4%. The Kiwi has also recovered slightly to trade at 0.5932, up from its previous low of 0.5897 yesterday.
The People’s Bank of China (PboC) has slashed rates to its one-year Loan Prime Rate (LPR) from 3.55% to 3.45% giving a slight boost to the Aussie dollar. China’s current economic slowdown keeps worsening with news of bankruptcy proceedings for a very large Chinese property developer, Evergrande. Debt is China’s largest problem attributed to its economic slowdown, with many unable to meet its obligations. Currently, China’s total debt has surged close to 300%, above an average of just under 250% for an average of 20 economies. China officials appear to be limiting the yuan currency supply, which in turn pushes up the CNH funding costs, in an effort to squeeze offshore short positions. This is causing a major move in its one month forward points to over 1.5%, the largest jump in six years.
