The Australian Dollar has tumbled to an 11-month low against the US Dollar and fell below parity for the first time in 10-months after a private business report showed that business confidence in the Australian economy declined, causing speculation to mount that the Australian Reserve Bank will make further interest rate cuts in a bid to further weaken the currency.
The ‘Aussie’ also fell against the majority of its most traded peers after Barclays cut its forecast for the currency, citing Australia’s falling yield advantage. Barclays lowered its 12-month projection for Australia’s dollar to 93 U.S. cents from 95. The recent “surprise” rate cut from the RBA has further undermined Australia’s yield advantage and will weigh on the Aussie.
Business confidence fell to -2 in April according to the National Australia Bank Ltd. The strength of the Australian currency has been blamed for the slowdown of exports and as such economists and traders are seeing a 60% chance that the Reserve Bank will make further interest rate cuts in the next three months.
Despite the currencies early weakness the ‘Aussie’ looks set to reverse its losses in the near future.
“The fundamental backdrop of the Australian dollar is very positive,” John Horner, a currency strategist in Sydney at Deutsche Bank AG, said in an interview with Bloomberg Television before the release of the Chinese data. The currency is expected to “recover from this weakness as some of the negative sentiment on China gets reversed in a month ahead.”
The ‘Aussie’ was supported by the release of Chinese data that showed that industrial production in Australia’s biggest trading partner increased by 9.3% in April compared to the previous year, Retail sales also jumped by 12.8%.
Current Australian Dollar (AUD) Exchange Rates
The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9981
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7698
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6498
The Australian Dollar/ New Zealand Dollar Exchange Rate is currently in the region of: 1.2026
(Correct as if 09:30 am GMT)
Comments are closed.