Dollar Rebounds But Aussie Drops To New 6-Year Lows On Poor GDP Data

The dollar moved higher in Asian trading as it attempted to cut Tuesday’s losses on the back of weaker-than-expected manufacturing survey. The ISM manufacturing index fell to a two-year low in August, adding to the poor PMI data from China earlier in the day. The greenback started the session at a low of 119.21 yen and climbed to a high of 120.46 yen before easing to 119.99 yen in late Asian trading.

Shares across Asia recovered from earlier lows. The main indices in China reduced their losses to 1% after opening 4% lower.

Australia’s economy slowed more than expected in the second quarter of the year with quarter-on-quarter growth coming in at 0.2% against estimates of 0.4%. This was the lowest growth since 2011 and the year-on-year rate slowed to 2.0%. A 3.3% fall in exports was the main drag on growth during the quarter. The aussie hit a new 6-year low after the data, dropping to 0.6981 against the greenback, but later bounced back above 0.70 to 0.7027.

Its New Zealand counterpart was trading higher though on Wednesday after data showing a rise in global dairy prices. The kiwi was trading at 0.6345 in late Asian trading against the dollar, down from an earlier high of 0.6368.

Crude oil prices stabilised somewhat after slumping 8% on Tuesday on renewed concerns about weak global demand. WTI crude futures were last down 2.2% at $44.41, while Brent futures were lower by 2.3% at $48.42.

The euro was little affected from mixed PMI data as it continued to benefit by risk-off trade. The single currency was at 1.1282 against the dollar and at 0.7380 against the pound in late Asian session. The pound fell to its lowest level against the dollar since early June after yesterday’s weak manufacturing PMI numbers. Sterling hit a low of 1.5286 just before the start of European session.

Coming up later in the day, UK construction PMI and Eurozone producer prices will be the main data in European session. Over in the US, the August ADP employment change, second quarter unit labor costs and July factory orders will be closely looked at for any signs of the Fed’s next move.

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