The Australian dollar managed to hold its ground, trading near the opening level against its major peers, despite fundamentals that were rather unfavorable to the currency today.
The Australian Bureau of Statistics reported that the seasonally adjusted number of home loans dropped by 2.1% in August from July. Analysts had expected a smaller drop by 0.9%.
Yesterday, the International Monetary Fund downgraded the growth outlook in 2019 for Asia in general and Australia and China, Australia’s biggest trading partner, in particular. Australia’s growth outlook for the next year was revised down by 0.3 percentage point to 2.8%, while China got a negative revision by 0.2 percentage point to 6.2%. The report warned about the potential negative impact of trade wars:
Continued trade tensions could further undermine business confidence, hurt financial markets, disrupt supply chains, and discourage investment and trade in the region.
The report also mentioned other risks for the regional economy, including monetary tightening by the Federal Reserve:
Further, Asia is vulnerable to tighter global financial conditions, spurred by higher U.S. interest rates, a sudden deterioration of risk appetite, rising trade tensions, and political and policy uncertainty.
AUD/USD opened at 0.7123 and ticked down to 0.7117 by 10:45 GMT today. EUR/AUD was little changed at 1.6268. AUD/JPY was at its opening level of 79.89.
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