Australian Dollar Extends Decline
27 February 2015 - 5:52PM
RTTF2
The Australian dollar extended its early decline against the
other major currencies in the Asian session on Friday, as most of
the economist expect the Reserve Bank to cut official interest
rates again in the next week's monetary policy meeting.
The Reserve Bank of Australia's interest rate decision is due
next Tuesday.
Most of the economist expect the bank to cut interest rates by
25 basis points to 2 per cent, having reduced the headline rate by
the same margin to 2.25 percent on February 3.
Higher unemployment rate, weak business investment expectations
together with low inflation are likely to push the RBA to cut its
key rates next Tuesday.
The RBA's rate cut decision also depend on when the U.S. Federal
Reserve begins hiking its interest rates. The Fed is expected to
begin hiking around the middle of the year, but any delays could
push the aussie higher.
In economic news, data from the Reserve Bank of Australia showed
that the total private sector credit in Australia was up 0.6
percent on month in January, exceeding expectations for a gain of
0.5 percent, which would have been unchanged from the December
reading. On a yearly basis, overall credit climbed 6.2 percent,
also topping forecasts for 6.0 percent and up from 5.9 percent in
the previous month.
Thursday, the Australian dollar fell on dissapointing
fourth-quarter private capex data which had also led to speculation
of an interest rate cut next week. The Australian dollar fell 1.10
percent against the U.S. dollar, 0.62 percent against the yen, 0.02
percent against the euro, 0.80 percent against the NZ dollar and
0.45 percent against the Canadian dollar.
In the Asian trading today, the Australian dollar fell to a
1-week low of 0.9727 against the Canadian dollar, from yesterday's
closing value of 0.9758. The aussie may test support near the 0.95
region.
Against the NZ dollar, the aussie dropped to an 8-day low of
1.0320 from yesterday's closing quote of 1.0346. On the downside,
1.02 is seen as the next support level for the aussie.
The aussie fell to 3-day lows of 92.72 against the yen and
0.7776 against the U.S. dollar, from yesterday's closing quotes of
93.13 and 0.7798, respectively. If the aussie extends its
downtrend, it is likely to find support around 89.09 against the
yen and 0.76 against the greenback.
The aussie edged down to 1.4403 against the euro, from
yesterday's closing quote of 1.4355. The aussie is likely to find
support around the 1.48 area.
Looking ahead, German import price index for January is due to
be released at 2:00 am ET.
In the European session, Swiss KOF leading indicaror index for
February is slated for release.
In the New York session, the second estimate of U.S. fourth
quarter GDP data , pending home sales for January, U.S. chicago PMI
for February and U.S. Reuters/University of Michigan's final
consumer sentiment index for February are due.
At 10:15 am ET, Federal Reserve Bank of New York President
William Dudley is exected to participate in a panel discussion,
along with Cleveland Fed President Loretta Mester, about the new
neutral for the federal funds rate and condition of the economy at
the 2015 US Monetary Policy Forum, in New York.
Subsequently, Federal Reserve Governor Stanley Fischer will
participate in a panel discussion about central banking with large
balance sheets at the 2015 US Monetary Policy Forum, in New York at
1:30 pm ET.
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