Australian Dollar Declines After RBA Lowe Keeps Rate Cut Option On Table
February 05 2019 - 10:05PM
RTTF2
The Australian dollar lost ground against its key counterparts
in the Asian session on Wednesday, after the Reserve Bank of
Australia governor Philip Lowe suggested the possibility of an
interest rate cut at some point, if the unemployment rate increases
notably and inflation remained too low.
Speaking at the National Press Club in Sydney, Lowe remarked
that the rate outlook is now more evenly balanced, with the next
move to be either up or down.
"Over the past year, the next-move-is-up scenarios were more
likely than the next-move-is-down scenarios. Today, the
probabilities appear to be more evenly balanced," Lowe told.
Lowe said that he did not see a strong case for a near-term
change in the cash rate.
But the possibility of a rate cut is more likely than it used to
be, if unemployment were to rise and inflation remained too low,
Lowe said.
"In the event of a sustained increase in the unemployment rate
and a lack of further progress towards the inflation objective,
lower interest rates might be appropriate at some point," Lowe
added.
The aussie declined to 0.7133 against the greenback, its weakest
since January 25. The next possible support for the aussie is seen
around the 0.70 level.
The aussie fell to a weekly low of 78.27 against the yen, from a
high of 79.66 touched at 7:30 pm ET. The aussie is poised to target
support around the 76.00 level.
After rising to 1.5744 against the euro at 7:30 pm ET, the
aussie reversed direction and slipped to a weekly low of 1.5961. If
the aussie drops further, 1.61 is likely seen as its next support
level.
The aussie weakened to 0.9395 against the loonie, a level unseen
since January 3. On the downside, the aussie is likely to locate
support around the 0.92 region.
The aussie dropped to near a 5-week low of 1.0403 against the
kiwi and held steady thereafter. At yesterday's close, the pair was
worth 1.0487. Next key support for the aussie is seen around the
1.02 level.
Looking ahead, German construction PMI for January is due in the
European session.
In the New York session, U.S. trade data for November, Canada
building permits for December and Ivey PMI for January are
scheduled for release.
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