AUD/USD unfazed by Westpac’s lead index signaling weak Aussie growth in H2, 2019

  • AUD/USD remains flag with China’s Yuan pushing higher against the US Dollar.
  • Westpac’s lead index points to more weak Aussie growth in the second half of this year.  

AUD/USD is flat-lined in Asia with traders ignoring a clear signal by Westpac–Melbourne Institute Leading Index that Australian economic growth will likely remain below trend through the rest of 2019.

The currency pair is currently trading at 0.6880, representing marginal gains on the day, having hit a high of 0.6886 earlier today.

The six months annualized growth rate in the Westpac– Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, rose slightly from –0.49% in April to –0.45% in May.

The index growth rate, however, remained negative for the sixth straight month in May – a signal that the Aussie economy will see below-average growth rate in the second half of this year.

Even so, the AUD has so far managed to avoid losses, possibly due to the strength in China’s offshore Yuan exchange rate (USD/CNH). The Chinese currency rose to 6.8925 against the US Dollar earlier today, the highest level since May 14.

That said, the RBA June meeting minutes released on Tuesday confirmed that interest rates will probably fall further by the year-end.

As a result, the AUD/USD pair will likely have a hard time extending the bounce from Tuesday’s low of 0.6832 and may slip in to the negative during the day ahead.

Pivot levels

 

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