Australian dollar drops on slowing economy

Story link: Australian dollar drops on slowing economy

The US dollar strengthened on new data showing that labor unit costs were up by 4.9 percent in the second quarter, but some analysts questioned the data, saying that corporate profitability would not be as strong as it is if the labor unit costs are accurate. Analysts also questioned new non-manufacturing data from the Institute for Supply Management that had the headline number up but all nine main components down.

In any case, the greenback added 0.3 percent to $1.2780 against the euro, while it was 0.6 percent higher in relation to the Japanese yen, to ¥116.75. The US currency also gained 0.7 percent versus both sterling and the Australian dollar, to $1.8810 and $0.7654 respectively.

Most of the Aussie’s trouble came from new data showing that the Australian economy grew by a mere 0.3 percent in the second quarter, when it had been expected to have grown by 0.7 percent. While some analysts believe that the slowdown is not the beginning of a new trend, the Aussie still dropped 1.2 percent in relation to the New Zealand dollar, to NZ$1.1803.

Sterling was down on a drop in consumer confidence to its lowest level since December 2003. The UK currency was 0.4 percent lower versus the euro, to £0.6793. The yen was also weaker against the euro, also dropping 0.4 percent to ¥149.24.