The Australian dollar slid against its major rivals today as economic data from Australia and China was less than stellar. Comments from central bank’s chief Philip Lowe were not helping the matter as he was explaining dangers of high household debts to the economy.
Australia’s trade balance demonstrated a surplus of A$3.11 billion in March that was lower than A$3.33 billion predicted by analysts and the February reading of A$3.66 billion. The Caixin China Services PMI slid from 52.1 in March to 51.2 in April. The report followed the similarly poor data about manufacturing released earlier this week.
Reserve Bank of Australia Governor Lowe talked about risks that the high level of household debt poses for the Australian economy. He said:
Given the high levels of debt and housing prices, relative to incomes, it is likely that some households respond to a future shock to income or housing prices by deciding that they have borrowed too much. This could prompt a sharp contraction in their spending, as they try to get their balance sheets back into better shape. An otherwise manageable downturn could be turned into something more serious.
AUD/USD dropped from 0.7419 to 0.7407 as of 10:59 GMT today, touching the lowest level since January 11. EUR/AUD jumped from 1.4665 to 1.4754. AUD/CHF slid from 0.7379 to 0.7350.
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