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AUD falls against dollar on disappointing fundamentals

February 13, 2014

The Australian dollar dropped against the federal currency and other major currencies, following the release fundamentals showing Unemployment rate in Australia inclined in January. Unemployment rose to 6.0%, higher than estimates, while employers failed to add new jobs for the second straight month, leading to worsening conditions in the labor sector. The released data are pressuring the Australian Reserve Bank to keep interest rate at its record low, despite the last meeting witnessed intentions to raise the nation`s benchmark to face inflationary pressures, which pushed the local currency upside in the last period. Moreover, the decision of raising interest rate is going to weigh on Australian companies and specially those working in the mining sector, due to tightening credit conditions. This may lead to losing more jobs and push the labor market towards further falls. AUD/USD fell in early trades to the lowest in three days at 0.8936 from 0.9030 levels. The Australian dollar also declined against the Japanese yen to record 91.57 from 92.43 before the disappointing data were released. AUD picked up against majors in the last period backed by positive data showing progress in China`s exports and trade balance surplus, noting that China is Australia`s first trade partner, which pushed the Australian currency upside.

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Source: Financial Markets

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