Australian Dollar Falls As China Services Sector Slows
03 July 2015 - 02:29PM
RTTF2
The Australian dollar weakened against the other major
currencies in the Asian session on Friday, after data showed that
the services sector in China continued to expand in June at a
slower pace. Traders also exercised caution amid some uncertainty
about the outcome of the Greek referendum on Sunday. The currency
started falling earlier, following the release of nation's
disappointing retail sales data.
Data from HSBC Bank showed that the services sector in China
continued to expand in June, albeit at a slower pace, with a PMI
score of 51.8. That's down from 53.5 in May, although it remains
above the boom-or-bust line of 50 that separates expansion from
contraction. It marked the slowest increase in new business at
service providers in 11 months, while new work rose only slightly
at manufacturers.
The composite index came in at 50.6, down from 51.2 in the
previous month and touching a 13-month low.
Data from the Australian Bureau of Statistics showed that the
total value of retail sales in Australia was up a seasonally
adjusted 0.3 percent on month in May, coming in at A$24.154
billion. That was shy of forecasts for an increase of 0.5 percent
following the downwardly revised 0.1 percent decline in April.
Meanwhile, most Asian share markets traded lower amid
uncertainty on the outcome of Sunday's Greece referendum. A plunge
in iron-ore prices overnight prompting losses in the mining sector,
weighed on the Australian stock market.
Conflicting opinion polls have added to the ambiguity about
whether Greeks will vote to endorse the austerity measures proposed
by the country's international creditors or reject the terms.
Greek Prime Minister Alexis Tsipras has called on Greeks to vote
"no" in the referendum, which he claimed is not an up or down vote
on Greece's membership in the eurozone.
Tsipras argued that voting against the proposals offered by
creditors would give the government more leverage in the
negotiations.
German Chancellor Angela Merkel and Eurogroup President Jeroen
Dijsselbloem have said further negotiations would have to wait
until after the referendum.
Traders also await the Reserve Bank of Australia's interest rate
decision, due on July 7. The economists expect the bank to hold
rates at 2.00 percent.
In other economic news, data from the Australian Industry Group
or AIG, showed that Australia's services index for June expanded to
51.2, from 49.6 in May.
Thursday, the Australian dollar fell after data showed that the
trade deficit for May rose more than economists expected. The
Australian dollar fell 0.15 percent against the U.S. dollar, 0.26
percent against the yen, 0.68 percent against the euro and 0.58
percent against the Canadian dollar.
In the Asian trading today, the Australian dollar fell to more
than a 2-1/2-month low of 0.7566 against the U.S. dollar, from
yesterday's closing value of 0.7631. The aussie may test support
near the 0.74 region.
The aussie dropped to a 4-day low of 93.24 against the yen and a
3-day low of 1.4629 against the euro, from yesterday's closing
quotes of 93.90 and 1.4519, respectively. If the aussie extends its
downtrend, it is likely to find support around 91.00 against the
yen and 1.48 against the euro.
Against the New Zealand and the Canadian dollars, the aussie
slipped to 3-day lows of 1.1282 and 0.9519 from yesterday's closing
quotes of 1.1349 and 0.9562, respectively. On the downside, 1.07
against the kiwi and 0.93 against the loonie are seen as the next
support levels for the aussie.
Meanwhile, the NZ dollar slightly fell following the China PMI
data.
The NZ dollar fell to 0.6703 against the U.S. dollar, from
yesterday's closing value of 0.6716. The kiwi may test support near
the 0.65 region.
Against the yen and the euro, the kiwi edged down to 82.45 and
1.6539 from yesterday's closing quotes of 82.66 and 1.6484,
respectively. If the kiwi extends its downtrend, it is likely to
find support around 81.00 against the yen and 1.67 against the
euro.
Looking ahead, Services PMI reports for June from major European
economies and Eurozone retail sales data for May are due to be
released in the European session.
U.S. markets will be closed in observance of Independence
Day.
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