Dollar falls from one month high

 

dollar downNegativity about the outlook for the European economy pushed the Australian dollar down from the one month high hit on the back of strong Chinese trade figures.

At 0700 AEDT on Thursday, the local unit was trading at 90.31 US cents, down from 90.64 cents on Wednesday.

The Australian dollar finished Wednesday’s local session on a new one-month high after China’s trade surplus surged 14 per cent year-on-year in January to $US31.86 billion ($A35.35 billion), reassuring markets that its economy is still quite strong.

However, OM Financial senior client adviser Stuart Ive said the Australian dollar steadily lost ground during overnight trade due to a number of factors.

“Obviously, there was a big spike higher on that headline Chinese trade figure but if you look at the data it looks like it was being fed by inflated invoices,” he said.

“There’s a little bit of scepticism around the trade data that saw some selling but the Aussie dollar also played second fiddle to European and UK news.”

During the overnight session, the Bank of England updated its economic growth forecasts and indicated it could raise its interest rate later in the year to control rising inflation.

Meanwhile, the European Central Bank executive board member Benoit Coeure said he was supportive of the bank taking further drastic action to boost the euro zone economy.

“That saw us drift back on down as we await the Australian employment data today,” Ive said.

Official labour force figures to be released on Thursday morning are expected to show the number of people with jobs rose by 15,000 in January, after a surprise fall of 22,600 in December.

The unemployment rate is forecast to rise to 5.9 per cent, from 5.8 per cent the previous month, an AAP survey of 12 economists showed.

Ive said the direction in the Australian dollar “is very much going to be dictated by the employment numbers”.

AAP

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