Investing.com - The Australian dollar ended Friday’s session at the lowest level since October against its U.S. counterpart, as concerns over the global economic outlook and speculation the Federal Reserve will end its stimulus program sooner-than-expected boosted demand for the greenback.
AUD/USD hit 1.0181 on Friday, the pair’s lowest since October 9; the pair subsequently consolidated at 1.0201 by close of trade, down 0.97% for the week.
The pair is likely to find support at 1.0181, Friday’s low and a four-and-a-half-month low and resistance at 1.0289, the high from February 28.
The Australian dollar came under pressure after government data showed that manufacturing activity in China fell to a five-month low of 50.1 in February from a reading of 50.4 in January.
China is Australia's largest export destination.
Appetite for risky assets was further weighed after weak manufacturing data out of the U.K. and the euro zone fuelled concerns over the outlook for global growth.
Revised data showed that manufacturing activity in the euro zone contracted in February at the same pace as in January, while the U.K. manufacturing sector suffered a shock contraction last month.
The greenback also found support amid worries over U.S. spending cuts, known as the sequester, after lawmakers failed to reach an agreement on a deficit reduction plan.
President Barack Obama warned Friday that federal spending cuts will cause “ripple effects” through the U.S. economy. Obama called on Congress to pass an alternative budget plan that closes tax loopholes and cuts spending, including entitlements.
Meanwhile, speculation the Fed might end its bond-buying program was fuelled after data showed that the U.S. manufacturing sector expanded at its fastest pace since June 2011 last month, while a separate report showed that U.S. consumer confidence rose in February.
The Institute for Supply Management said its manufacturing purchasing managers’ index rose to 54.2 from 53.1 in January, while the final reading of the University of Michigan’s consumer sentiment index came in at 77.6, from a preliminary reading of 76.3.
Elsewhere, the Aussie was higher against the euro on Friday, with EUR/AUD dipping 0.19% to hit 1.2760.
The euro came under pressure amid ongoing speculation of a possible rate cut by the European Central Bank at its upcoming policy meeting on Thursday.
Concerns that Italy would not be able to continue to implement structural reforms and austerity measures following inconclusive election results also weighed.
In the week ahead, markets will be focusing on interest rate decisions by the Reserve Bank of Australia and the ECB. In addition, Friday’s data on U.S. nonfarm payrolls will be closely watched as investors attempt to gauge the strength of the economic recovery.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 4
Australia is to publish official data on building approvals, a leading indicator of future construction activity, as well as data on company operating profits.
Tuesday, March 5
The RBA is to announce its benchmark interest rate. The rate announcement is to be accompanied by the bank’s rate statement, which contains important insights into current and future economic conditions from the bank’s perspective.
Australia is also to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
In the U.S., the Institute of Supply Management is to release a report on service sector activity, a leading indicator of economic health.
Wednesday, March 6
Australia is to release official data on fourth quarter economic growth, the broadest indicator of economic activity and the leading measure of the economy's health.
The U.S. is to publish data on ADP nonfarm payrolls, which leads government data on nonfarm payrolls by two days. The U.S. is also to release official data on factory orders and crude oil stockpiles.
Thursday, March 7
Australia is to release official data on the trade balance, the difference in value between imports and exports.
The U.S. is to publish the weekly government report on initial jobless claims and official data on the trade balance.
Friday, March 8
The U.S. is to round up the week with government data on nonfarm payrolls and the unemployment rate and data on average hourly earnings.
AUD/USD hit 1.0181 on Friday, the pair’s lowest since October 9; the pair subsequently consolidated at 1.0201 by close of trade, down 0.97% for the week.
The pair is likely to find support at 1.0181, Friday’s low and a four-and-a-half-month low and resistance at 1.0289, the high from February 28.
The Australian dollar came under pressure after government data showed that manufacturing activity in China fell to a five-month low of 50.1 in February from a reading of 50.4 in January.
China is Australia's largest export destination.
Appetite for risky assets was further weighed after weak manufacturing data out of the U.K. and the euro zone fuelled concerns over the outlook for global growth.
Revised data showed that manufacturing activity in the euro zone contracted in February at the same pace as in January, while the U.K. manufacturing sector suffered a shock contraction last month.
The greenback also found support amid worries over U.S. spending cuts, known as the sequester, after lawmakers failed to reach an agreement on a deficit reduction plan.
President Barack Obama warned Friday that federal spending cuts will cause “ripple effects” through the U.S. economy. Obama called on Congress to pass an alternative budget plan that closes tax loopholes and cuts spending, including entitlements.
Meanwhile, speculation the Fed might end its bond-buying program was fuelled after data showed that the U.S. manufacturing sector expanded at its fastest pace since June 2011 last month, while a separate report showed that U.S. consumer confidence rose in February.
The Institute for Supply Management said its manufacturing purchasing managers’ index rose to 54.2 from 53.1 in January, while the final reading of the University of Michigan’s consumer sentiment index came in at 77.6, from a preliminary reading of 76.3.
Elsewhere, the Aussie was higher against the euro on Friday, with EUR/AUD dipping 0.19% to hit 1.2760.
The euro came under pressure amid ongoing speculation of a possible rate cut by the European Central Bank at its upcoming policy meeting on Thursday.
Concerns that Italy would not be able to continue to implement structural reforms and austerity measures following inconclusive election results also weighed.
In the week ahead, markets will be focusing on interest rate decisions by the Reserve Bank of Australia and the ECB. In addition, Friday’s data on U.S. nonfarm payrolls will be closely watched as investors attempt to gauge the strength of the economic recovery.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 4
Australia is to publish official data on building approvals, a leading indicator of future construction activity, as well as data on company operating profits.
Tuesday, March 5
The RBA is to announce its benchmark interest rate. The rate announcement is to be accompanied by the bank’s rate statement, which contains important insights into current and future economic conditions from the bank’s perspective.
Australia is also to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
In the U.S., the Institute of Supply Management is to release a report on service sector activity, a leading indicator of economic health.
Wednesday, March 6
Australia is to release official data on fourth quarter economic growth, the broadest indicator of economic activity and the leading measure of the economy's health.
The U.S. is to publish data on ADP nonfarm payrolls, which leads government data on nonfarm payrolls by two days. The U.S. is also to release official data on factory orders and crude oil stockpiles.
Thursday, March 7
Australia is to release official data on the trade balance, the difference in value between imports and exports.
The U.S. is to publish the weekly government report on initial jobless claims and official data on the trade balance.
Friday, March 8
The U.S. is to round up the week with government data on nonfarm payrolls and the unemployment rate and data on average hourly earnings.