Investing.com - The Australian dollar fell to its lowest level since December against its U.S. counterpart on Friday, as fears that the crisis in the euro zone may be exacerbated by political turmoil in Greece and weak economic data out of China weighed.
AUD/USD hit 1.0219 on Monday, the weekly high; the pair subsequently consolidated at 1.0016 by close of trade on Friday, falling 1.33% over the week.
The pair is likely to find support at 0.9893, the low of December 20 and resistance at 1.0122, Wednesday’s high.
Market sentiment was hit by increasing expectations that a fresh round of elections in Greece is inevitable, after attempts to form a coalition government failed.
On Friday, Alexis Tsipras the head of Greece’s largest anti-bailout party Syriza rejected a coalition with Socialists and Conservatives, fuelling concerns over the country’s ability to abide by the terms of its EUR130 billion bailout agreement.
Rating agency Fitch warned Friday that it would place the ratings of all euro zone members on review pending possible downgrades, if Greece was to exit the euro zone as a result of its current crisis.
Meanwhile, speculation over the health of Spain’s troubled banking system and the government’s ability to cut one of the largest deficits in the euro area also weighed on market sentiment.
Sentiment on the growth linked Australian dollar was also hit after weaker-than-expected Chinese industrial production data for April sparked concerns that demand for commodities could falter.
The Australian dollar had already come under heavy selling pressure earlier in the week, after Prime Minister Julia Gillard said Wednesday that the government will cut spending in order to give the central bank more flexibility in setting interest rates.
Earlier this month, the Reserve Bank of Australia surprised markets with a larger-than-expected rate cut to 3.75%.
The comments came after official data showed on Tuesday that Australia’s trade deficit more than doubled in March, as commodity exports declined for a third successive month.
In the week ahead, investors will be watching developments in Greece as well as the first talks between the new French President Francois Hollande and German Chancellor Angela Merkel, amid fears that Hollande’s focus on growth rather than austerity measures as a means to tackle the euro zone crisis could spark tensions with Germany.
In addition, the U.S. is to produce government data on retail sales and inflation, while the Federal Reserve is to publish the minutes of this month’s policy setting meeting.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, May 14
Australia is to release official data on home loans, a key indicator of demand in the housing market.
Later Monday, the U.S. is to produce a report on mortgage delinquencies, an important signal of the housing market’s health.
Tuesday, May 15
The RBA is to release the minutes of its latest policy meeting, while Australia is to publish official data on new motor vehicle sales, an important signal of consumer confidence.
The U.S. is to publish official data on retail sales, the leading indicator of consumer spending, which accounts for the majority of overall economic activity. The country is also to publish official data on consumer price inflation, which accounts for a majority of overall inflation. Reports on manufacturing activity in New York, as well as U.S. net long-term securities transactions and business inventories are also due for release.
Wednesday, May 16
Australia is to release a report on consumer sentiment, followed by official data on wage price inflation, a leading indicator of consumer inflation.
The U.S. is to produce official data on building permits and housing starts, followed by reports by the Federal Reserve on the capacity utilization rate and industrial production. Government data is also to be released on crude oil inventories ahead of the minutes of the Fed’s latest policy meeting.
Thursday, May 17
Australia is to publish data on inflation expectations, an important indicator of economic health.
Meanwhile, the U.S. is to produce government data on unemployment claims, followed by a report on manufacturing activity in the Philadelphia area.
Friday, May 18
Members of the Group of Eight nations are to begin talks in Camp David, hosted by U.S. President Barak Obama.
AUD/USD hit 1.0219 on Monday, the weekly high; the pair subsequently consolidated at 1.0016 by close of trade on Friday, falling 1.33% over the week.
The pair is likely to find support at 0.9893, the low of December 20 and resistance at 1.0122, Wednesday’s high.
Market sentiment was hit by increasing expectations that a fresh round of elections in Greece is inevitable, after attempts to form a coalition government failed.
On Friday, Alexis Tsipras the head of Greece’s largest anti-bailout party Syriza rejected a coalition with Socialists and Conservatives, fuelling concerns over the country’s ability to abide by the terms of its EUR130 billion bailout agreement.
Rating agency Fitch warned Friday that it would place the ratings of all euro zone members on review pending possible downgrades, if Greece was to exit the euro zone as a result of its current crisis.
Meanwhile, speculation over the health of Spain’s troubled banking system and the government’s ability to cut one of the largest deficits in the euro area also weighed on market sentiment.
Sentiment on the growth linked Australian dollar was also hit after weaker-than-expected Chinese industrial production data for April sparked concerns that demand for commodities could falter.
The Australian dollar had already come under heavy selling pressure earlier in the week, after Prime Minister Julia Gillard said Wednesday that the government will cut spending in order to give the central bank more flexibility in setting interest rates.
Earlier this month, the Reserve Bank of Australia surprised markets with a larger-than-expected rate cut to 3.75%.
The comments came after official data showed on Tuesday that Australia’s trade deficit more than doubled in March, as commodity exports declined for a third successive month.
In the week ahead, investors will be watching developments in Greece as well as the first talks between the new French President Francois Hollande and German Chancellor Angela Merkel, amid fears that Hollande’s focus on growth rather than austerity measures as a means to tackle the euro zone crisis could spark tensions with Germany.
In addition, the U.S. is to produce government data on retail sales and inflation, while the Federal Reserve is to publish the minutes of this month’s policy setting meeting.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, May 14
Australia is to release official data on home loans, a key indicator of demand in the housing market.
Later Monday, the U.S. is to produce a report on mortgage delinquencies, an important signal of the housing market’s health.
Tuesday, May 15
The RBA is to release the minutes of its latest policy meeting, while Australia is to publish official data on new motor vehicle sales, an important signal of consumer confidence.
The U.S. is to publish official data on retail sales, the leading indicator of consumer spending, which accounts for the majority of overall economic activity. The country is also to publish official data on consumer price inflation, which accounts for a majority of overall inflation. Reports on manufacturing activity in New York, as well as U.S. net long-term securities transactions and business inventories are also due for release.
Wednesday, May 16
Australia is to release a report on consumer sentiment, followed by official data on wage price inflation, a leading indicator of consumer inflation.
The U.S. is to produce official data on building permits and housing starts, followed by reports by the Federal Reserve on the capacity utilization rate and industrial production. Government data is also to be released on crude oil inventories ahead of the minutes of the Fed’s latest policy meeting.
Thursday, May 17
Australia is to publish data on inflation expectations, an important indicator of economic health.
Meanwhile, the U.S. is to produce government data on unemployment claims, followed by a report on manufacturing activity in the Philadelphia area.
Friday, May 18
Members of the Group of Eight nations are to begin talks in Camp David, hosted by U.S. President Barak Obama.