Within the broader business cycle we go through periods of whats called ‘risk on’ and ‘risk off’, which basically means there are times when optimism is sky high and there are times when optimism is quite low. Right now it appears we’re going through a period of ‘risk off’ and with the Aussie dollar classified as a risk asset along with equities, AUD has continued to drift lower while equities remain mostly flat or marginally lower than this time yesterday.
The catalyst for this risk off appears to be concerns about remarks made by Trump with regards to North Korea, but also generally poorer economic conditions locally, with Aussie Westpac Consumer Sentiment going negative yesterday while Home Loans growth also missed the mark. All in all it appears Government cracking the whip with regards to the frothy housing market appears to be working and hence we’re seeing a pull back in the number of new loans, and value of new loans.
AUD/USD which had been trading above 0.7900 is now back below this level while AUD/EUR looks set to drift below 0.6700 today. Not a great deal of data out today, so I’d imagine more of the same and a slow drift lower.
AUD EXCHANGE RATES:
AUD/USD – 0.7893
AUD/GBP – 0.6065
AUD/EUR – 0.6708
AUD/NZD – 1.0721
AUD/JPY – 86.789
DATA RELEASES TODAY:
GBP – Manufacturing Production at 6.30pm
USD – PPI at 10.30pm
***Above rates are indicative wholesale rates and intended as a guide only***
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