Greg Gibbs, analyst at Amplifying Global FX Capital, suggests that the Australian currency has retreated to just above the 0.70 level for the third time since October last year and a sustained fall below this level is likely to exacerbate negative sentiment towards the AUD.
Key Quotes
“Considering the widespread calls for lower rates, impending election, ongoing weakness in the housing market, lack of response to external factors, underlying doubts over the Chinese economy and financial stability, most commentators appear to think a break below 0.70 is only a matter of time.”
“However, much may depend on the labour market data. The RBA has highlighted that it will be watching this data closely, and several analysts are expecting the softer activity indicators and business sentiment, and recent ebbing in job ads, to slow employment growth.”
“The RBA has noted that Australia is not alone in experiencing more sustained strength in employment data. For instance, Canadian employment data was much stronger than expected on Friday, despite weak Q4 GDP growth. Even the Eurozone has continued to display solid employment growth in recent data, belying the sharp retreat in GDP growth. These trends in other countries caution against expecting a retreat in Australian labour data next week.”
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