Investing.com - Australian dollar fell sharply on disappointing
employment data and IMF comments that Australia needs weaker AUD to
achieve balanced growth.
AUD/USD fell 0.85% as Australia's unemployment rate in January
rose to 6% against an expectation of 5.8%, as it stood in
The Australian Bureau of Statistics reported that the number of
people employed fell by 3,700 against a forecast of an increase of
15,000. In the previous month they fell by 23,000. The full time
employment in January fell by 7,100 against the fall of 32,100 in
December. The participation rate however remained unchanged at
64.5% against the expectation of 64.6%.
AUD was already falling in the morning after IMF comments that
Australia requires a weaker currency to achieve a balanced growth.
"With growth currently on the soft side, the real exchange rate
still strong and efforts to reduce the budget deficit likely,
monetary policy should remain accommodative and act as the primary
macroeconomic tool for managing aggregate demand in the near term,"
said the IMF.
The comments were made by the IMF Executive Board in its Article
IV statement which were drafted on Feb. 10 and based on staff
reports that were completed on January 24 but discussions were
completed on Nov. 20, 2013.
IMF noted the staff assessment that the "exchange rate currently
appears to be modestly overvalued in real effective terms," but
this could weaken as major advanced economies tighten monetary
policy. It said that a weaker Australian dollar is a "key factor
for achieving broader-based growth in the economy."
Meanwhile in New Zealand, the Business NZ Purchasing Manager's
Index fell to 56.2 in January from 56.4 in December. A reading of
above 50 indicates expansion. For the 16th consecutive month the
manufacturing activity expanded in the country.
AUD/USD fell 0.85% at 0.8950, NZD/USD rose 0.07% at 0.8313 while
USD/JPY fell 0.04% at 102.48.
The dollar index, which tracks the performance of the greenback
versus a basket of six other major currencies, was up 0.02% at
On Thursday, Federal Reserve Chair Janet Yellen is to testify on
the bank's semiannual monetary policy report before the House
Financial Services Committee, in Washington.
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