Australian Dollar falls further after weak China data
The Australian Dollar (AUD) faces further selling pressure against its major currency peers during the Asian trading session on Tuesday, sliding 0.16% to near 0.7060 against the US Dollar (USD). The Aussie pair was already under pressure since the beginning of Tuesday’s session after a three-day upside move, and has dropped after the release of the weak China data.
Given that the Australian economy relies heavily on its exports to Beijing, economic data from China carries significant influence on the Australian Dollar.
The National Bureau of Statistics of China has reported that Retail Sales declined by 0.6% Year-on-Year (YoY) in May, while they were expected to remain flat after rising 0.2% in April. Fixed Asset Investment YoY contracted at a faster pace of 4.1% vs. -2% and the prior reading of -1.6%.
China’s Industrial Production data has come in stronger at 4.5% against 4.3% estimates and the previous release of 4.1%.
Meanwhile, investors brace for high volatility in the antipodean as the Reserve Bank of Australia (RBA) is set to announce its monetary policy at 04:30 GMT, in which it is expected to leave its Official Cash Rate (OCR) steady at 4.35%.
This will be the first RBA’s monetary policy this year, when it is expected to leave interest rates unchanged. So far this year, the RBA has raised its OCR by 25 basis points (bps) in all three policy meetings to tame higher inflationary pressures in Australia.
Investors will pay close attention to the RBA’s guidance regarding the monetary policy outlook, at times when the Australian Consumer Price Index (CPI) has started showing signs of cooling down, and employment conditions appear to be worsening.
In April, Australia’s CPI arrived lower at 4.2% Year-on-Year (YoY), missed 4.4% estimates, and the prior reading of 4.6%. The Unemployment Rate jumped to 4.5% from expectations and the previous reading of 4.3%.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Indian Rupee outperforms amid strong foreign inflows, shrugging off surging US Dollar
USD/JPY Price Forecast: Enters fresh upside leg on consolidation breakout
CoreWeave's quarterly report hits record highs, but Bernstein and HSBC still maintain "sell" ratings
The main concerns focus on three major issues: management claims an annual price of $20-25 million per megawatt, while actual financial data shows only $9.2 million; independent calculations by two institutions both indicate a financing gap of about $33 billion; by 2028, the market will see an influx of 55 gigawatts of new computing power, 20 times CoreWeave’s own capacity. With current debt at $46.9 billion and equity only $4 billion, and no free cash flow within this decade—the question of whether its scarce performance can last until the loans are repaid is something even strong quarterly reports cannot answer.
The AI boom may follow the path of the 19th-century railway bubble, and builders may not be the ultimate winners
Goldman Sachs analyst Bobby Molavi compared the current situation to the 19th-century British railway mania: 500 companies spent more than the nation's annual income building 8,000 miles of railway, with most early investors losing out, while the real beneficiaries were the later "passengers." He pointed out that the current AI craze is driven by both debt and momentum, and that the S&P 500’s forward P/E ratio of 18x is only "a bit cheaper." Whether the builders can retain value is uncertain, and history does not offer an optimistic answer.
Crypto prices
More
