The Australian dollar bounced today after yesterday’s huge drop. Fundamentals remain bad though and the minutes of the last central bank’s policy meeting added to negative factors that put pressure on the Aussie.
The Reserve Bank of Australia released the minutes of its April policy meeting, showing that an interest rate cut remains likely. The central bank complained about high exchange rate and stated:
The outlook for inflation, as currently assessed, would provide scope for further easing should that be necessary to support demand.
The minutes added to the negativity caused by yesterday’s news. Still, the Australian currency did not extend its decline and bounced, most likely because it has tumbled too much yesterday. Yet it does not mean that the downside momentum has been lost, making it possible for the Aussie to resume decline later.
AUD/USD bounced from 1.0310 to 1.0361 as of 4:43 GMT today after touching the low of 1.0292. AUD/JPY went up from 99.73 to 101.10 following the drop to 98.68 (the weakest rate since April 4). EUR/AUD edged down from 1.2635 to 1.2612, while its daily high was at 1.2667, highest since March 12.
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