The Australian dollar keeps bleeding due to a combination of bearish drivers. Despite a marginal recovery on Friday amid a better risk sentiment, AUDUSD finishes another week with substantial losses. The pair registered mid-October lows overnight and remains below the 0.68 handle during the European session.
Earlier this week, the Aussie dollar accelerated the decline amid poor economic data out of Australia. Wage price index came in at 0.5% in the third quarter versus 0.6% previously. Despite the result matched the forecast, the report pointed to weakening wages in the country. However, Westpac Consumer Sentiment indicator rose by 4.5% after two monthly declines in a row. Meanwhile, job market data disappointed, as employment change came in at -19.0K versus the expected rise by 15.0K. Moreover, full-time employment fell 10.3K.
All these signals from the economic front suggest that the RBA, which is in a wait-and-see mode now, could at some point cut rates further, which is a bearish sign for the national currency. As a reminder, the interest rate in Australia is now at a record low of 0.75%.
In addition to bearish signs in the domestic economy, poor Chinese data add to the negative sentiment around the AUDUSD pair, as the Australian currency is fairly sensitive to economic updates out of the world’s second largest economy. The data this week showed that China industrial production came in at 4.7% versus 5.4% expected.
Against this backdrop, Aussie plunged from local peaks marginally above the 0.69 handle and could threaten the 0.6750 area should the greenback demand continue to persist and AUD traders to price in another rate cut by the RBA some time later.
The technical picture for the pair looks bearish as well, at least as long as the prices remain below the 100-DMA around 0.6840. Moreover, the short-term outlook for the pair will worsen further should the US and China fail to report some progress towards a deal any time soon, as the commodity currency is sensitive to risk sentiment as well.