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Aussie Dollar Fails to Hold Gains, Shrugs Off Credit Data

Aussie Dollar Fails to Hold Gains, Shrugs Off Credit Data

David Cottle, Analyst


Talking Points

  • Australian private sector credit expanded strongly but as expected in November
  • Housing and business credit outpaced the personal sector
  • AUD/USD gained, then weakened as a generally strong US Dollar-selling impetus faded

The Australian Dollar has weakened a little against its US cousin on Friday, showing little apparent response to news of an as-expected expansion in local private-sector credit.

Credit rose 5.4% on-year in November, according to the Reserve Bank of Australia, which was about what markets were looking for and just a tick above October’s 5.3% rise. On a monthly basis credit was up 0.5%, which was the same rise as that seen the month before.

Credit for housing purchase rose 6.3% on-year, while business credit added a healthy 4.9%. Personal credit extension was less impressive, however, as it often can before the Holiday Season kicks in. It increased by 1.2%.

The Australian Dollar initially continued to rise after the data. However, given a generally weaker greenback in what are clearly holiday thinned markets, it’s doubtful that the numbers played much part in the move.

The US Dollar had strengthened against just about everything since Donald Trump’s shock November election win, and it looks as though some of the big bets on it have come off into the New Year holiday weekend.

The euro is perhaps the most obvious beneficiary of this process, but the Australian Dollar has gained too.

However, as Friday wears on in Asia it looks as though the impetus to sell the US currency has faded, and the Australian Dollar has duly retraced in the past hour or so. AUD/USD is now at 0.72297, below the 0.722450 peak reached earlier in the session.

AUD/USD out of puff

Chart compiled using TradingView

Want to know how Daily FX analysts feel about 2017’s first quarter? Check out their forecasts here.

--- Written by David Cottle, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.