Australian Dollar Drops Amid Risk Aversion
11 July 2018 - 1:29PM
RTTF2
The Australian dollar drifted lower against its major
counterparts in the Asian session on Wednesday amid risk aversion,
as the United States announced it would slap 10 percent tariffs on
an extra 200 billion worth of Chinese imports in an escalating
trade conflict between the world's two biggest economies.
Investors are now bracing for retaliation from Beijing. "The
outburst of large-scale mutual levying of tariffs will inevitably
destroy Sino-U.S. trade," assistant minister of commerce Li
Chenggang told a forum in Beijing.
The move comes after the U.S. imposed 25 percent tariffs on $34
billion of Chinese imports, for which Beijing immediately
retaliated in equal measure.
The latest survey from Westpac Bank showed that consumer
confidence in Australia bounced higher in July. The bank's index
surged 3.9 percent this month to a score of 106.1. That follows the
0.3 percent gain in June to a reading of 102.1.
Figures from the Australian Bureau of Statistics showed that the
total number of owner occupied housing commitments in Australia
increased unexpectedly in May, after falling in the previous five
months.
On a seasonally adjusted basis, total number of owner occupied
dwelling commitments rose 1.1 percent month-over-month in May,
reversing a 0.9 percent fall in April.
The aussie dropped to 5-day lows of 1.5847 versus the euro and
0.7404 versus the greenback, from its early highs of 1.5735 and
0.7459, respectively. If the aussie falls further, it may find
support around 1.60 against the euro and 0.72 against the
greenback.
The aussie weakened to 2-day lows of 0.9727 against the loonie
and 1.0870 against the kiwi, reversing from its previous highs of
0.9780 and 1.0906, respectively. The aussie is likely to find
support around 0.96 against the loonie and 1.07 against the
kiwi.
The aussie hit a 2-day low of 82.07 against the yen and held
steady thereafter. On the downside, 81.00 is likely seen as the
next support level for the aussie.
Data from the Ministry of Economy, Trade and Industry showed
that Japan's tertiary activity index increased for the second
straight month in May.
The tertiary activity index edged up 0.1 percent
month-over-month in May, following a 1.0 percent rise in April. In
contrast, economists had expected a 0.3 percent decrease for the
month.
Looking ahead, U.S. PPI for June and wholesale inventories for
May are due in the New York session.
The Bank of Canada is scheduled to release its interest rate
decision at 10:00 am ET. Economists forecast the benchmark rate to
be raised to 1.50 percent from 1.25 percent.
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