Positive Domestic Data Unable to Help Australian Dollar

The Australian dollar fell today, joining its New Zealand peer in decline. While domestic macroeconomic data was good, it was not enough to outweigh the impact of disappointing economic indicators released in China, Australia’s biggest trading partner.
The Australian Bureau of Statistics reported that the Wage Price Index rose 0.6% in the June quarter from the previous three months on a seasonally adjusted basis. Ahead of the report, analysts had predicted the index to rise at the same 0.5% rate as in the preceding quarter.
The Westpac-Melbourne Institute Index of Consumer Sentiment rose 3.6% in August from July. Yet the report was not particularly optimistic about the result, saying:

Superficially this result comes as somewhat of a surprise given that the survey was conducted against a turbulent backdrop with global financial markets roiled by escalating trade tensions between the US and China, the ASX down 3.4% and the AUD off 3¢ US since the July survey.

However, the result does come in the aftermath of an unexpected 4.7% fall in the Index in June/July that came despite consecutive rate cuts from the RBA and the restoration of political certainty following the May Federal election.

Whatever positive effect the domestic data could have on the Aussie, it was overshadowed by disappointing Chinese indicators. That hurt riskier currencies, particularly those of China’s trading partners, including Australia and New Zealand.
AUD/USD dropped from 0.6797 to 0.6749 as of 11:52 GMT today. EUR/AUD advanced from 1.6431 to 1.6556. AUD/JPY declined from 72.54 to 71.41.

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