AUD falls following jump in Australian unemployment

United States Dollar:

Sterling fell yesterday as the latest UK Manufacturing Production reading printed worse than previously forecast. The release showed a sluggish 0.3% increase for June, half of the 0.6% rise the markets were forecasting. GBP/USD, which had been trading around 1.6865 at the time of the release, dropped to 1.6835 immediately. Pound-bulls would have been hoping for a reversal of the previous month’s abysmal -1.3% drop, however this didn’t materialise. It appears geopolitical tensions and a strong pound are starting to weigh on the sector, and given this week’s poor Manufacturing PMI there is every chance this trend will continue. Later yesterday morning we had the rolling three-month GDP estimate from the NIESR. The reading of 0.6% for May-July was lower than the April-June reading of 0.8%. This fall is in line with some economists’ predictions that growth will start to slow in the UK in the second half of the year. GBP/USD currently trades at 1.6841. Later today, we have the Bank of England rate decision with rates expected to remain at 0.5%.

Euro:

Yesterday saw the release of the worst German Factory Orders figure since November 2012. The reading for June, which was expected to rise 0.5%, saw a drop of -3.2% m/m. The release followed a revised drop of -1.6% the previous month. German business confidence has taken a hit recently given the tensions between Russia and Ukraine. With Germany heavily reliant on Russian gas imports, the uncertainty caused by the situation seems to have filtered through to the German manufacturing sector. Italy fell into a triple-dip recession yesterday, with Preliminary Q2 GDP printing -0.2%, following on from -0.1% fall in Q1. This morning has seen more bad news from Germany, with Industrial Production m/m increasing 0.3% in June when a 1.4% increase was forecast. GBP/EUR currently trades at 1.2588, with EUR/USD trading at 1.3374. All eyes will now turn to this afternoon’s eurozone rate announcement and the ECB press conference, to see if Mario Draghi hints at future stimulus measures to combat low inflation in the region.

Aussie and Kiwi Dollars:

Australian unemployment jumped unexpectedly overnight from 6.0% to 6.4%, sending the Aussie tumbling across the board. Unemployment in Australia is now at a 12-year high following this huge rise. AUD/USD gapped from .9350 to .9300 after the fall, and has continued to fall throughout the Asian session, to currently trade at .9260. It is not yet clear as to whether sampling issues and a change in the way the data is collected has played a role, or if the sharp rise is genuine. Tonight sees the quarterly RBA Monetary Policy Statement which will give the central bank’s opinion on the health of the economy. GBP/AUD is at 1.8180, NZD/USD is at .8460 and GBP/NZD is at 1.9900.

Date Releases for the next 24 hours:

AUD: RBA Monetary Policy Statement

EUR: Minimum Bid Rate; ECB Press Conference

GBP: Asset Purchase Facility; Official Bank Rate

NZD: No data

USD: Unemployment Claims.