Australian Dollar Down on Europe & Domestic Fundamentals

Australian dollar rose a little today. The currency dropped yesterday as concerns about the future of the European Union reemerged. The domestic fundamental also weren’t supportive for Australia’s currency.

The warning by Moody’s Investor Service about possible downgrades of sovereign ratings spooked investors from riskier assets. Analyst explained that the European politicians demonstrated the plans to resolve the problems of the euro-region in the long term, but didn’t present anything to explain how they are going to deal with the immediate concerns. The European Central Bank wasn’t helping either as it’s not only not declines to expand its bond purchasing program, as traders were hoping it would do, but it looks like the bank decreased its bond purchases.

Europe isn’t the only one to blame for the woes of the Aussie (the nickname of the Australian currency) as Australia itself isn’t in a great shape. The trade balance surplus shrank from A$2.249 million in September to A$1.595 million in October. The housing starts decline 6.8 percent in the third quarter on the seasonally adjusted basis.

AUD/USD traded at 1.0077 today as of 6:04 GMT after yesterday’s drop from 1.0206 to 1.0071. AUD/JPY was near its opening level of 78.46 today after yesterday it fell from 79.26 to 78.46.

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