February 21, 2014
The Australian Dollar currently doesn’t look too attractive for various investors. The AUD/USD is losing ground, and the Chinese report on Thursday didn’t help.
The Australian Dollar didn’t have an easy time this week. Investors have been looking for a safe harbor in order to avoid risks emerging from developing economies, and China brought a few unpleasant surprises.
The HSBC report on the tentative index of business activity in manufacturing sector in February showed the decline to 48.3. The figure has been under important psychological level of 50 and can’t recover above it. Investors are concerned, regardless of obvious numbers on the inflow of foreign capital to China, which was supposed to prove stability of the economic system.
Australia traditionally perceives China as the biggest strategic partner, which is why it reacts on such reports.
The pair’s performance was also undermined by unemployment statistics, which appreciated up to 6%.
At the upcoming meeting of the RBA they will decide to downgrade the interest rate from the current 2.50%. Which would be quite reasonable.
The Euro continues to decline. The rate has already crossed the support. But still has not been a decisive break beneath it. So the support is about to be tested, and the outcome will determine future trend of the currency pair.
Yesterday the rate attempted to rise past the 102.60 area but failed. Now the rate is sliding down from that peak. Upside resistance still holds. The outlook remains bearish.