It looked like all fundamentals were negative for the Australian dollar today. That included the disappointing growth of private sector credit, the dovish monetary policy outlook, and the market sentiment that was unfavorable for riskier currencies. Yet surprisingly, the Aussie did not perform that bad considering all the negative factors. While it fell against some major rivals, the currency managed to gain on others.
The Reserve Bank of Australia reported that private sector credit increased 0.2% in August from the previous month, the same as in July. That was a disappointing result considering that the consensus forecast had promised a bit faster growth by 0.3%. Year-on-year, the indicator rose 2.9% in August 2019. That was a significantly slower rate of growth than 4.5% registered in August 2018.
The monthly Melbourne Insitute Inflation Gauge was at 0.1% in September. That was a small improvement from the reading of 0.0% logged in August.
While today’s data was unfaborable for the Australian currency, perhaps an even more important negative factor was the outlook for tomorrow’s monetary policy decision from the Reserve Bank of Australia. Market participants expect the central bank to cut interest rates by 25 basis points to a new record low of 0.75%. The RBA will announce its decision at 4:30 GMT.
AUD/USD fell from 0.6760 to 0.6750 as of 13:05 GMT today. EUR/AUD declined from 1.6178 to 1.6137. AUD/JPY was at little changed at 72.95 after falling to the daily low of 72.70 earlier. AUD/CHF gained from 0.6695 to 0.6730.
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