The Australian dollar was surprisingly strong today despite adverse fundamentals, which were including poor macroeconomic data, the negative market sentiment, and the dovish monetary policy outlook.
The six month annualized growth rate in the WestpacâMelbourne Institute Leading Index, which suggests the likely pace of economic activity relative to trend three to nine months into the future, fell from â0.13% in March to â0.47% in April. The report commented on the result:
The Index growth rate has been consistently negative over the last five months, a clear signal that economic growth through the three quarters of 2019 is likely to be below trend.
Construction work done dropped 1.9% in the March quarter from the previous three months. That is compared to the median forecast that was promising a 0.1% increase.
The poor macroeconomic data and the ongoing trade war between the United States and China reinforced the view that the Reserve Bank of Australia will perform two interest rate cuts this year. Such outlook prompted many market analysts to advise shorting the Aussie.
AUD/USD advanced from 0.6882 to 0.6892 as of 9:49 GMT today. EUR/AUD was down from 1.6209 to 1.6201, backing off from the daily high of 1.6238. GBP/AUD dropped from 1.8452 to 1.8384.
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