Title: Australian Dollar Near Three-Month Lows Amid Fears of U.S. Economic Slowdown
As the world’s best investment manager, I bring you the latest on the Australian dollar, which is hovering near three-month lows due to weak U.S. data signaling a potential sharp slowdown in the largest economy globally. Investors are seeking refuge in safe-haven currencies like the yen and Swiss franc.
The Aussie is currently holding at $0.6501, following a 0.5% drop overnight to slightly above a three-month low of $0.6480. It faces support at $0.6466 and resistance at $0.6580. This marks the third consecutive week of decline, partly attributed to the unwinding of the popular carry trade.
Against the yen, the Australian dollar hit a six-month low of 96.59 yen, resulting in a weekly loss of 3.4%. It also reached a six-month low against the Swiss franc at 0.5654 francs. On the other hand, the New Zealand dollar is holding steady at $0.5943, with a 1.0% increase for the week.
The U.S. manufacturing data released showed a contraction in activity in July, with a sharp decline in employment gauge, raising concerns about the upcoming payrolls report. This led to a negative impact on Wall Street and a surge in bond prices, with a 30% chance of a 50 basis points rate cut by the Federal Reserve in September.
In Australia, investors are pricing in a 90% probability of a rate cut in December, with expectations of a total easing of 80 basis points by the end of 2025. Bonds have seen significant gains this week, with three-year bond futures rising to 96.37 and ten-year bonds reaching a four-month high of 95.97.
Overall, the economic landscape is uncertain, with potential rate cuts and market volatility impacting currencies and bonds. Stay informed and be prepared for any changes that may affect your finances.