Australian Dollar Slides On RBA Minutes
19 May 2015 - 03:00PM
RTTF2
The Australian dollar weakened against the other major
currencies in the Asian session on Tuesday, as the Reserve Bank of
Australia's minutes from its recent monetary policy meeting offered
scope for further rate cut.
At the meeting on May 5, the RBA lowered its benchmark interest
rate by 25 basis points to a record low of 2.00 percent. The
minutes showed that the board members' choice to leave out guidance
on monetary policy in the post meeting policy statement does not
limit their scope for any action appropriate at future
meetings.
The board members seemed to have deliberated the timing of an
interest rate adjustment and were undecided between the current
meeting and the next. With the revised staff forecast to be
released a few days following the meeting, members felt that a rate
cut at the current meeting was appropriate in light of addressing
the challenges of communication.
The members also felt that further depreciation of the aussie is
likely and essential for balanced growth, given the significant
declines in commodity prices.
Traders now await the next RBA monetary policy meeting, due on
June 2.
The Australia's benchmark S&P/ASX 200 index is currently
down 0.54 percent or 30.40 points at 5,628. The broader All
Ordinaries index is also down 0.49 percent or 28.00 points at
5,632.
Monday, the Australian dollar fell against its major currencies,
after Reserve Bank of Australia Deputy Governor Philip Lowe said
the central bank is likely to lower its interest rates again at the
August meeting. The Australian dollar fell 0.54 percent against the
U.S. dollar, 0.01 percent against the yen, 0.14 percent against the
euro and 0.32 percent against the Canadian dollar on Monday.
In the Asian trading today, the Australian dollar fell to 6-day
lows of 0.7956 against the U.S. dollar and 95.43 against the yen,
from yesterday's closing quotes of 0.7986 and 95.84, respectively.
If the aussie extends its downtrend, it is likely to find support
around 0.76 against the greenback and 93.00 against the yen.
Pulling away from an early 6-day high of 1.0849 against the NZ
dollar and a 4-day high of 1.4145 against the euro, the aussie
dropped to 1.0796 and 1.4203, respectively. On the downside, 1.06
against the kiwi and 1.44 against the euro are seen as the next
support levels for the aussie.
Against the Canadian dollar, the aussie edged down to 0.9681
from yesterday's closing value of 0.9711. The aussie may test
support near the 0.94 region.
Looking ahead, U.K. consumer, producer and retail price indices
for April, German ZEW economic sentiment index for May and Eurozone
final CPI for April and trade balance for March are due to be
released.
At 3:00 am ET, European Central Bank Governing Council member
Christian Noyer is expected to speak at a Euromoney conference on
inflation-linked bonds in Paris.
In the New York session, U.S. building permits and housing
starts for April are set to be published.
Bretton Woods Committee 2015 Annual Meeting will be conducted in
Washington D.C. at 8:30 am ET, in which World Bank Managing
Director Sri Mulyani Indrawati, U.S. Treasury Secretary Jacob Lew
and International Monetary Fund head Christine Lagarde are deliver
speeches.
At 11:30 am ET, Bank of Canada Governor Stephen Poloz will
address the Greater Charlottetown Area Chamber of Commerce in
Prince Edward Island, followed by a news conference.
Half-an-hour later, Swiss National Bank director Jean-Pierre
Danthine will deliver a speech titled "Swiss Monetary Policy Facts
and Fictions", in Geneva.
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