The Australian Dollar rebounded from its lowest level since September 2012 after it made gains against the majority of its most traded peers on speculation that the currency’s recent decline has been excessive.
Against the US Dollar the ‘Aussie’s’ 14-day strength index dropped close to the 30 mark that some traders see as a sign that an assets value may reverse direction.
The currency also found support after the deputy governor of the Reserve Bank of Australia said that the markets have misinterpreted yesterdays comments by Governor Glenn Stevens that the Bank’s policy maker had contemplated about making an interest rate cut before settling on leaving them at a record low of 2.75%.
Stevens said in his speech yesterday, “If the economy needs a lower exchange rate, it will probably get it.”
The ‘Aussie’ slid yesterday and odds for a cut to the RBA’s key rate increased after Stevens said the board deliberated for a long time before its decision. Lowe said today that the governor’s comments were light-hearted. He added that he doesn’t expect any rate cuts to happen until at least November.
Despite Thursday’s respite the Australian Dollar is expected to make further declines.
“Our feeling remains that either the Dollar will continue to fall naturally, or the RBA will need to give it another push with a further interest rate cut,” said Credit Suisse strategists.
Other economists however are unsure that the currency will continue to make declines at the pace seen recently, at least not without help.
“I’m skeptical the ‘Aussie’ will fall significantly further unless we see a larger deterioration to the outlook for China,” said Janu Chan, a Sydney-based economist at St. George Bank Ltd. “The RBA has ramped up the talk about the Aussie being high, really talking it down in a way and acknowledging that possibility that the cash rate could fall further.”
Current Australian Dollar (AUD) Exchange Rates
The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9113
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7012
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5976
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4260
The New Zealand Dollar/Australian Dollar Exchange Rate is currently in the region of: 0.8548
The US Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0972
The Pound Sterling /Australian Dollar Exchange Rate is currently in the region of: 1.6733
Correct as of 10:25 am GMT