Aussie Drifts Lower Following Soft GDP Figures


The Australian dollar tumbled against peers after weaker than expected growth figures. The data showed that the Australian economy grew at a pace of 0.2% versus an expectation of 0.5% in the fourth quarter of 2018. The soft economic data are raising the chances of an interest rate cut by the Reserve Bank of Australia later this year. After the GDP report, the chances of a rate cut in October meeting rose from 50% to 67%. The AUDUSD dropped to a low of $0.7027, and the EURAUD climbed to a two-month high of 1.6077.


The dollar index which measures the greenback against a basket of major currencies settled higher for the fifth consecutive day at 96.89. The strong economic data were enough to boost the dollar demand. The ISM Non-Manufacturing PMI rose to 59.7 versus an expectation of 57.3, and the December Home Sales was at 621 thousand versus an expectation of 600 thousand. Market participants await the release of the February ADP Nonfarm Employment Change later today. The USDJPY continued to hover near 112 level, while the EURUSD dropped to a two-week low of $1.1287.


Metals prices were almost unchanged as the dollar extended gains while Treasury yields drifted lower. The gold ounce traded at a six-week low of $1281 and bounced back towards $1286, the silver ounce settled at $15.12, and palladium finished at $1515, the lowest close in a week.


Oil prices drifted slightly lower on US stock buildup and US production outlook. The American Petroleum Institute reported that the weekly US oil stock rose by 7.29 million barrels last week. On the other hand, Chevron and Exxon Mobil pointed to an increase in shale oil production. The West Texas Intermediate crude futures dropped to a low of $55.96, and Brent futures slipped to a low of $65.19. Market participants await the release of the official US inventory data from the US Energy Information Administration.

Major Economic Events

GMT Country Event Expectation Previous
13:15 US ADP Nonfarm Employment Change (Feb) 189 213
13:30 US Trade Balance (Dec) -57.9 -49.3
13:30 CA Trade Balance (Dec) -1.70 -2.06
15:00 CA BoC Interest Rate Decision 1.75% 1.75%
15:30 US Crude Oil Inventories 1.203 -8.647


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