Investing.com - The Australian dollar plunged more than 1% against its U.S. counterpart on Friday, as appetite for riskier assets weakened amid concerns over the global economic outlook.
AUD/USD hit a daily low of 0.8680 on Friday, a level not seen since October 6, before subsequently consolidating at 0.8686 by close of trade, down 1.1% for the day and 0.11% lower for the week.
The pair is likely to find support at 0.8651, the low from October 6, and resistance at 0.8838, the high from October 9.
Market sentiment was hit by fears that Germany, the euro zone’s largest economy is being dragged into a recession after recent data indicated unexpected weakness in manufacturing and exports.
Steep declines in commodity prices also fuelled fears that the global economy is slowing. Brent crude prices fell to their lowest level in almost four years on Friday.
Earlier in the week, the International Monetary Fund cut its forecasts for global growth in 2014 and 2015 and warned that the recovery remains weak and uneven.
The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, ended the week down 1% at 85.92. The move ended a 12-week rally that saw the index gain more than 8% since early July.
The dollar weakened after the minutes of the Federal Reserve’s September meeting released Wednesday showed that some officials were concerned over a slowdown in global growth and the impact of the stronger dollar on the U.S. inflation outlook.
"Some participants expressed concern that the persistent shortfall of economic growth and inflation in the euro area could lead to a further appreciation of the dollar and have adverse effects on the U.S. external sector," the minutes said.
The minutes prompted investors to trim back expectations for an earlier-than-expected hike in U.S. interest rates.
On Friday, Fed Vice Chairman Stanley Fischer said weaker-than-expected global growth could prompt it to slow the pace of eventual interest rate hikes.
Meanwhile, in Australia, official data released Friday showed that the number of employed people in Australia fell by 29,700 last month, confounding expectations for a 17,600 increase.
The report also showed that Australia's unemployment rate ticked up to 6.1% in September from 6.0% in August.
On Tuesday, the Reserve Bank of Australia left interest rates unchanged at a record low 2.5% and reiterated that the Australian dollar's strength continues to dampen growth.
Data from the Commodities Futures Trading Commission released Friday showed that speculators added to their bearish bets on the Australian dollar in the week ending October 7.
Net shorts totaled 26,486 contracts, compared to net shorts of 2,017 in the preceding week.
In the week ahead, investors will be awaiting U.S. data on retail sales and industrial production for fresh indications on the strength of the economic recovery.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, October 13
Markets in the U.S. will be closed for Columbus Day.
Tuesday, October 14
Australia is to release private sector data on business confidence.
Wednesday, October 15
Australia is to release a private sector report on consumer sentiment, as well as official data on new vehicle sales.
The U.S. is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The country is also to report on producer prices and manufacturing activity in the New York region.
Thursday, October 16
Australia is to release a report on inflation expectations.
The U.S. is to release the weekly report on initial jobless claims as well as data on industrial production and manufacturing activity in the Philadelphia region.
Friday, October 17
The U.S. is to round up the week with reports on building permits and housing starts, as well as a preliminary report on consumer sentiment.