The Australian dollar was markedly weaker on the last trading day of the week, dropping through the 1.0400 barrier as Asian session came to a close as markets grew increasingly downcast about future growth Down Under. The pair came under an assault from sellers after RBA Governor Glenn Stevens noted that he was surprised the local unit hasn’t fallen more sharply in response to lower commodity prices and a slowing global economy.
Mr. Stevens declined to provide specific targets for the Aussie but added that, â€œ”We’re not talking 20 cents worth”. Nevertheless, the Australian monetary officials are clearly somewhat concerned about the strength the Australian dollar amidst growing signs of slowdown of demand from China. Yesterday’s Chinese PMI data showed further deterioration in the countryâ€™s manufacturing sector suggesting that forward growth will tepid at best.
As we noted earlier, the Aussie has now become a very dangerous trade from the upside having failed to hold the 1.0500 level several times in a row over the past week. The unit remains weak on the crosses as well declining against both the euro and the pound as it loses some of its luster from both the speculators and investors on lower growth prospects going forward.