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Australian Dollar Slides On NAB Business Confidence, IMF's China Outlook

The Australian dollar weakened against other major currencies in the early Asian session on Thursday as sentiment dampened after the International Monetary Fund warned that China needed additional reforms to address growing risks in various parts of the economy.

IMF on Wednesday stressed on the importance of accelerating structural reforms under the Twelfth Five-Year Plan. The lender called for continued liberalization of the capital account, carefully sequenced with financial and exchange rate reforms.

The Fund noted that further progress on demand rebalancing is particularly crucial, including by opening markets to domestic and foreign competition.

The aussie was also weighed by a fall in NAB business confidence index for the second quarter. The National Australia Bank's survey showed that Australia's business confidence index fell to minus one from 2 points in the first quarter.

The aussie dropped to 0.9566 against the loonie, pulling back from a 6-day high of 0.9642 hit on Wednesday. The aussie may seek support around the 0.95 level.

The aussie hit a 2-day low of 0.9184 against the greenback, moving away from an early high of 0.9252. On the downside, the aussie may probably find support around the 0.91 area.

Reversing from an early high of 92.12 against the yen, the aussie reached as low as 91.63. If the aussie extends its downtrend, it may challenge support around the 91.00 level.

The aussie eased from an early high of 1.4188 against the euro and declined to 1.4275. The next downside target for the aussie lies around the 1.433 level.

The aussie that closed yesterday's deals at 1.1680 against the NZ dollar edged down to 1.1662. Further breakdown of the aussie may see it targeting support around the 1.15 level.

Confidence among New Zealand consumers remained high in July despite a marginal decline from a month earlier, a survey by ANZ and Roy Morgan showed today.

The consumer confidence index retraced slightly in July, falling to 119.8 from June's three-year high of 123.9. The current conditions index dropped 4 points to 118, while the future conditions index eased 5 points to 121.

Eurozone current account data for May is due in the European session.

Canada wholesale sales for May and U.S. weekly jobless claims for the week ended July 13 are slated for release in the New York session.

Federal Reserve Chairman Ben Bernake will testify before the Senate Banking Committee at 10:00 am ET.

by RTT Staff Writer

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