Australian Dollar set for big move – EU and US data worries [Video]

A close look at the Australian dollar to US dollar balance.

While many are telling the vanilla story today, of weaker than expected US Payrolls for the market’s decline on Friday, there is actually much more going on?

The run of economic data across Europe, the USA and China only furthers our central scenarios of generally lowing economies with persistent inflation in the West.

Image  European Retail Sales

European Retail Sales contracted 0.3% last month. The data jumps about, but there have been mostly negative months this year. As consumers continue to stumble under the weight of energy sanctions, and broadening price pressures.

In the US, everyone focussed on the Payrolls data, which has been the least important information on the economic score card for decades now. Employment is the latest, most lagging and delayed of all indicators. So much so that it shouldn’t be called an indication of anything, but merely a confirmation of an economic scenario previously held. It suits my view that the jobs data was lower than expectations, but I feel no need or accuracy in drawing any attention to it. Except to look the other way

What was of real interest to this writer on the day, was the continuing upward pressures in wages growth. Average weekly earnings in the US rose another 0.4% in July. This is the number the Federal Reserve will have noticed too.

The Fed will remain on hold, but as we, and we alone I believe, have said all along, rates are up here to stay. With a continuing tightening bias. There was never going to be a pivot to cutting rates. What a load of nonsense.

On the Australian Dollar front, Australia's relationship with China plays a significant role in the value of the Australian Dollar going forward. China being one of Australia's largest trading partners, and any disruptions or restrictions in trade between the two countries can impact the Australian economy and its currency. If there are tensions in the Australia-China trade relationship, it could put downward pressure on the Australian Dollar.

Moreover, a relatively low Australian Dollar can have both advantages and disadvantages. On the positive side, a weaker currency can boost exports by making Australian goods and services more competitive in international markets. However, it may also lead to higher import costs and potentially contribute to inflationary pressures.