Aussie Hits Fresh 7-year Low on Week Retail Sales and Chinese PMI

The Aussie dollar remains heavy after posting losses during the Asian trading session. During the U.S. morning it hit 0.7525 after making a low of 0.7567 earlier, which is the lowest level seen since Apr-2, when a 0.7533 low was posted. Steep declines in iron ore prices, which have hit two-month lows, had been priming the AUD for fresh losses, while Australian May retail sales data provided a spark. China services PMI also missed forecasts, and it was another ugly day on Chinese stock markets, with the Shanghai Composite closing with a 5.3% loss. Domestic focus is shifting to next week’s RBA policy review.

The AUD dove on weak data , with Australian May retail sales coming in at +0.3% month over month, below the expected +0.5%, and with China services PMI missing forecasts and Chinese stock market suffering another day of steep losses. This backdrop drove AUD/USD to a low of 0.7567, the lowest since Apr-2, when a 0.7533 low was seen. The other main currencies saw range-bound trade. More of the same seems likely for the remainder of the day, ahead of the referendum in Greece and with U.S. markets closed. The latest poll put the ‘yes’ vote fractionally ahead with 44.8%, with the ‘no’ vote at 43.4% and 11.8% undecided. 74% want to keep the euro. The survey was conducted by ALCO for the Ethnos newspaper. The outcome is too tight for markets to position off, especially given inherent error margins in polls.

The currency pair hit a fresh 7-year low and is poised to test the lows during the financial crisis near 0.700. Weekly momentum has turned negative with the MACD (moving average convergence divergence) index generating a sell signal, which points to lower prices.

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