The Australian dollar rallied earlier during the Thursday’s trading session on the back of robust domestic employment growth but retreated later due to a range of negative fundamentals.
The Aussie rallied after the Australian Bureau of Statistics reported that employers added 39,100 jobs in January compared to the previous month on a seasonally adjusted basis, much more than analysts had predicted — 15,200. The unemployment rate remained at 5.0%, as was expected.
The currency pulled back, though, after Westpac Banking Corporation trimmed its economic forecasts and predicted two interest rate cuts from the Reserve Bank of Australia this year. Westpac said:
The recent change of rhetoric from the Bank on that issue is important. Our revised growth, inflation and unemployment forecasts now make a convincing case for lower rates.
News that Dalian, one of China’s biggest ports, banned imports of coal from Australia also weighed on the Aussie.
Released overnight, a report from Commonwealth Bank of Australia showed that both manufacturing and services Purchasing Managers’ Indices fell this month. The manufacturing PMI slipped from 53.9 to 53.1 but remained firmly above the neutral 50.0. The services PMI, on the other hand, dropped from 51.0 to 49.3, falling below the level of no-growth and indicating contraction of the sector.
AUD/USD dropped from 0.7163 to 0.7110 as of 12:45 GMT today after rising to the daily high of 0.7207 earlier. EUR/AUD gained from 1.5820 to 1.5971 following the earlier drop to the daily low of 1.5743. AUD/JPY declined from 79.38 to 78.70.
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