- AUD/USD is losing altitude on weak forward-looking Aussie data
- AUD is being offered in response to dismal forward-looking Westpac leading index.
The data confirmed the Australian economy is set to operate at a below-trend pace in the near future.
The selling bias around the Australian Dollar (AUD) gathered traction, pushing the AUD/USD pair down to session lows near 0.6850 after a forward-looking indicator showed the Australian economy will continue to operate at a below-trend growth pace into late 2019 and early 2020.
The Westpac Leading Index (MoM) (Aug) fell to -0.30% from July’s print of 0.14%. The major contributors to the sharp fall in the growth rate over the month came from substantial drags from the share market, commodity prices, and dwelling approvals, according to official data.
Essentially, July’s improvement was short-lived and the index growth rate fell back into the negative territory in August. It is worth noting that the index’s growth rate has deteriorated over the last six months from –0.15% in March to –0.35% in August.
The data was released at 00:30 GMT, following the AUD/USD pair extended the losses to hit session lows near 0.6850. Prior to data release, the pair was trading near 0.6860, having hit highs near 0.6867 in the early Asian trading hours.
The Westpac leading index validated the Reserve Bank of Australia’s dovish tone and the currency pair will likely remain on the defensive during the day ahead.
The central bank is widely expected to cut rates in November, while Westpac believes there is no reason for the RBA to delay the rate hike beyond October.