Australian dollar managed to trim earlier losses against its US counterpart on trading Monday, but remained close to lows unseen in one month, as geopolitical tensions prompted investors to reduce their possessions of riskier assets.
Having touched a daily low at 0.8891 at 0:53 GMT, also the pairs lowest point since February 5th, AUD/USD traded at 0.8934 at 7:42 GMT, up 0.07% for the day. Support was likely to be found at February 5th low, 0.8874, while resistance was to be encountered at February 28th high, 0.8990.
The yield on Australian benchmark 10-year government bonds climbed to 3.98% today, after earlier reaching 3.96%, or the lowest level since February 4th. Nations government bonds gained, as market players focused on safe haven assets due to tensions in Ukraine.
US Secretary of State John Kerry is expected to travel to Ukraine on Monday, as Russia took control of Ukraines Black Sea region of Crimea.
“We’re starting the week with a risk-off tone from the events over the weekend, with the Russian and Ukrainian tensions escalating,” said Emma Lawson, a Sydney-based senior currency strategist at National Australia Bank Ltd., cited by Bloomberg News. “It tends to be on geopolitical risk that currencies like the Aussie do tend to underperform.”
The MSCI Asia Pacific Index of stocks lost 0.7%.
Meanwhile, on March 1st the China Logistics Information Center reported that the gauge of manufacturing activity in the country came in at a reading of 50.2 in February, slowing down in comparison with a month ago, when the index stood at 50.5. Februarys reading has been the lowest since June 2013.
HSBC Holdings Plc and Markit Economics, at the same time, said that their gauge of manufacturing output for China decreased to 48.5 in February, or the lowest level in seven months, which met preliminary estimates of experts, while in January the manufacturing PMI was at 49.5.
Both reports underscored the economic challenges, that China is currently faced with. Nations government has been struggling to ensure a steady growth of 7%, to curb lending and increase employment. Chinese economy may also remain vulnerable to financial risks, as the national currency registered a considerable decline against the US dollar in February. The Aussie is usually sensitive to data, coming out of China, as the latter is Australias largest export market.
In Australia, a survey by the Australian Industry Group (AIG) showed earlier today that the corresponding Performance of Manufacturing Index (Australian PMI) increased to a reading of 48.6 in February, from 46.7 in the preceding month. The PMI remained in the zone pointing to contraction in activity for a fourth successive month.
“Major efforts are now needed both by businesses and governments to lift the pace of innovation, to build business capabilities and to lift workforce skills in manufacturing and in other trade exposed sections of the economy. It is critical that we rebuild and recapitalize the sector and position it to take advantage of new opportunities and to assist in the task of rebalancing the economy which has become over-exposed to the fortunes of the mining sector”, AIG chief executive Innex Willox said, cited by Investing.com.
A separate report by the Australia and New Zealand Banking Group (ANZ) showed that the number of job advertisements in Australia rose 5.1% in February compared to January, after a month ago the number has been revised up to unchanged from a 0.3% drop previously.
Reserve Bank of Australias policy makers are expected to hold a meeting on March 4th, as they will probably leave the benchmark interest rate without change at the current record low level of 2.50%, according to all 32 economists, participated in a survey by Bloomberg News.
Elsewhere, the Australian dollar was gaining against the euro, with EUR/AUD cross down 0.30% on a daily basis to trade at 1.5427 at 8:37 GMT. AUD/NZD gained 0.16% to trade at 1.0667 at 8:39 GMT, after earlier touching a session low at 1.0643.
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