The Australian Dollar has weakened again during the last few trading sessions as news from the US shows that the world’s leading economy saw a rise in unemployment. The Australian Dollar is often sold off by investors if news in the US is negative as investors are put off from investing in riskier currencies which includes the Aussie Dollar.
The jobs figures were expected to be rather strong but the rate showed unemployment up to 6.7% from January’s 6.6%. I think the weather in the US has clearly not helped the economy and this has been felt by the jobs figures last week.
Weak Chinese data has also started to worry investors about a slowdown in China. During this weekend China announced that exports dropped 18.1% and the country said there was almost a US$23bn trade deficit during February compared to a surplus 12 months before. Last week saw the first non-payment of a bond by a huge solar panel company in China which has never happened before. Could this be the sign of things to come in China as it experiences a slowdown?
A slowdown in China is worrying for Australia as it has become so heavily reliant on Chinese demand for its natural resources. With Chinese GDP forecast for 7.% this year compared to previous years where we have seen an average of 10% anything worse could see further AUD weakness against the Pound. Japan has also revised its 2013 economic growth figure down from 1% to 0.7% and reported its biggest trade deficit for almost 30 years.
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