While AUD declined over most of its main counterparts, such as the GBP, JPY, Euro, and a US Dollar rise powered by diminishing Fed shift bets boosted selling.
The report on unemployment for last month provided conflicting information. Despite the 40,900 layoffs in Australia in July, the country’s unemployment rate surprisingly incurred a 3.4% decrease. In Q2, wages increased 2.6% compared to 2021, exceeding the 2.7% Blomberg average but surpassing the 2.4% level.
Manufacturing and service PMI will be released in the upcoming week. The rise in interest rate predictions may be affected by the S&P’s August initial results. At the beginning of August, the Reserve Bank of Australia (RBA) increased the cash rate to 1.85%.
Higher rates usually work to a currency’s advantage. However, the Australian Dollar is the underdog among currency speculators. Net positioning on AUD decreased to -59,248 as per the Commitments of Traders (COT) data issued by the CFTC last week. From the beginning of March, that is the largest net short position.
Due to two factors, traders are most probably betting against the AUD. Initially, the struggling Chinese economy will have a difficult time rebounding. On Monday, the People’s Bank of China (PBOC) is anticipated to lower interest rates, although this move might not have the intended effect on credit growth as anticipated.
By lowering the interest rate on its yearly lending facility, the central bank startled the markets. Markets saw the action as possibly signaling fear. A heatwave has compelled numerous manufacturing regions to shut down plants in an effort to reduce energy use, together with intermittent pandemic lockdowns.