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Forex News: Australian Dollar Falls Sharply As RBA Lowe Flags

Australian Dollar Falls Sharply As RBA Lowe Flags Another Rate Cut

10/15/2020 - 03:35:00 (RTTNews)

(RTTNews) - The Australian dollar slipped against its major counterparts in the Asian session on Thursday, after Reserve Bank of Australia Governor Philip Lowe signaled imminent rate reduction, saying that it would have more impact than earlier.

Speaking at a city conference, Lowe said that the board would not raise the cash rate until actual inflation is sustainably within the target range.

The cash rate is unlikely to be raised for at least 3 years.

"When the pandemic was at its worst and there were severe restrictions on activity we judged that there was little to be gained from further monetary easing," he told.

"The solutions to the problems the country faced lay elsewhere. As the economy opens up, though, it is reasonable to expect that further monetary easing would get more traction than was the case earlier."

While further monetary easing could help reduce financial stability risks, it should be weighed against any additional risks as people take more investment risk in the search for yield.

Lowe added that the board is committed to deploy available tools to support the recovery of the Australian economy.

Data from the Australian Bureau of Statistics showed that Australia's unemployment rate came in at a seasonally adjusted 6.9 percent in September.

That beat expectations for 7.1 percent and was up from 6.8 percent in August.

The Australian economy shed 29,500 jobs last month - again exceeding forecasts for a loss of 35,000 jobs following the addition of 111,000 in the previous month.

Economists expect the central bank to slash rate when it meets on November 2.

The aussie weakened to an 8-day low of 0.7111 against the greenback from Wednesday's closing value of 0.7161. On the downside, 0.70 is possibly seen as its next support level.

The aussie dipped to 74.87 against the yen, its lowest level since September 30. The aussie is poised to find support around the 72.00 level.

The Australian currency touched 1.6508 against the euro, marking a weekly low. Should the aussie falls further, it may find support around the 1.70 level.

The aussie fell to a 3-1/2-month low of 0.9350 against the loonie, compared to 0.9407 hit late New York Wednesday. Next key support for the aussie is seen around the 0.92 level.

The aussie slid to near a 3-month low of 1.0706 against the kiwi, from yesterday's closing value of 1.0757. The aussie is likely to test support around the 1.06 level, if it drops further.

Looking ahead, the U.S. weekly jobless claims for the week ended October 10, New York Fed's empire manufacturing survey for October and import and export prices for September will be featured in the New York session.

For comments and feedback: contact editorial@rttnews.com

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