CANBERA (dpa-AFX) – The Australian dollar weakened against other major currencies in the Asian session on Wednesday, as slower domestic growth spurred bets that the Reserve Bank of Australia (RBA) is likely to cut interest rates in early 2025. Also, a private survey showed that China’s services sector grew less than expected in November.
Data from the Australian Bureau of Statistics showed that Australia’s gross domestic product expanded a seasonally adjusted 0.3 percent on quarter in the third quarter of 2024. That missed expectations for an increase of 0.5 percent, although it was up from 0.2 percent in the previous three months.
On an annualized basis, GDP was up 0.8 percent, again missing forecasts for a gain of 1.1 percent and down from 1.0 percent in the three months prior.
Data from Judo Bank showed that the services sector in China continued to expand in November, albeit at a slower pace, with a services PMI score of 51.5. That’s down from 52.0 in October.
Also, the services sector in Australia continued to expand in November, albeit at a slower pace, the latest survey from Judo Bank revealed on Wednesday, with a services PMI score of 50.5. That’s down from 51.0 in October.
Worries about U.S. President-elect Donald Trump’s impending tariffs on various nation including China, also turned down the currency.
Traders reacted to the political turmoil in South Korea, a deepening political crisis in France and faltering economic growth in China, with the South Korean market plunging over 2 percent. They also remain optimistic about an interest rate cut by the U.S. Fed in December.
Traders will keep an eye on the release of the closely watched monthly U.S. jobs report on Friday that could impact the outlook for interest rates ahead of the Fed’s next monetary policy meeting in mid-December.
CME Group’s FedWatch Tool is currently indicating a 72.1 percent chance the Fed cuts rates by another 25 basis points but a 27.9 percent chance the central bank leaves rates unchanged.
In the Asian trading today, the Australian dollar fell to more than a 2-1/2-month low of 95.92 against the yen and nearly a 1-month low of 1.6368 against the euro, from yesterday’s closing quotes of 96.99 and 1.6195, respectively. If the aussie extends its downtrend, it is likely to find support around 94.00 against the yen and 1.66 against the euro.
Against the U.S., the Canada and the New Zealand dollars, the aussie slipped to a 4-month low of 0.6409, nearly a 3-month low of 0.9023 and a 2-day low of 1.0981 from Tuesday’s closing quotes of 0.6483, 0.9118 and 1.1022, respectively. The aussie may test support near 0.62 against the greenback, 0.89 against the loonie and 1.08 against the kiwi.
Looking ahead, Services PMI reports from various European economies and U.K. for November are due to be released in the European session.
In the New York session, U.S. MBA weekly mortgage approvals data, U.S. and Canada services PMI data for November, U.S. EIA weekly crude oil data and U.S. Fed Beige report are slated for release.
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