Australian Dollar Weakens As RBA Slashes GDP, Inflation Outlook

Date : 02/08/2019 @ 3:10AM
Source : RTTF2
Stock : Australian Dollar (B) VS United States Dollar Spot (Aud/USD) (AUDUSD)
Quote : 0.68812  -0.000205 (-0.03%) @ 6:21PM
Australian Dollar vs United Stat share price Chart

Australian Dollar Weakens As RBA Slashes GDP, Inflation Outlook

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The Australian dollar slipped against its major counterparts in the Asian session on Friday, after the Reserve Bank of Australia downgraded its growth and inflation forecasts in the wake of global growth worries as well as recent weak domestic data, particularly for consumption.

In its monetary policy statement, the RBA said that the global economic uncertainties have increased, especially due to trade tensions, and slowing demand growth in China.

The RBA revised down its GDP growth outlook to 3 percent over this year and 2.75 percent over 2020. In its November statement, the central bank had projected a growth of 3.25 percent for the year-ended 2019 and 3 percent for the year-ended 2020.

Inflation outlook was trimmed to 1.75 percent over this year from previous estimate of 2.25 percent. The bank retained its inflation forecast at 2.25 percent for the year-ended 2020.

The inflation downgrade reflected lower growth and expected near-term weakness in administered and utilities price inflation, the bank said.

Asian shares fell as the absence of any positive signs for a resolution in the U.S.-China trade row added to renewed concerns about global growth.

Ahead of next week's crunch trade negotiations in Beijing, CNBC reported that a Trump-Xi meeting is highly unlikely before a March 1 deadline, but the U.S. is likely to keep tariffs at 10 percent rather than raise them to 25 percent as scheduled.

The report came after White House economic adviser Larry Kudlow told Fox Business the U.S. and China have a "pretty sizable distance to go" before reaching a trade deal.

The aussie declined to more than a 4-week low of 77.44 against the Japanese yen, from a high of 78.01 hit at 5:15 pm ET. On the downside, 76.00 is possibly seen as the next support level for the aussie.

Data the Ministry of Finance showed that Japan logged a current account surplus of 452.8 billion yen in December - shy of expectations for a surplus of 458.5 billion yen and down from 757.2 billion yen in November.

The trade balance showed a surplus of 216.2 billion yen, exceeding forecasts for 132.4 billion yen following the 559.1 billion yen deficit in the previous month.

The aussie dropped to a 5-week low of 0.7061 against the greenback and more than a 4-week low of 1.6060 against the euro, off its early highs of 0.7104 and 1.5955, respectively. The next possible support for the aussie is seen around 0.69 against the greenback and 1.62 against the euro.

The aussie retreated to 0.9406 against the loonie, from a 2-day high of 0.9454 seen at 5:45 pm ET. If the aussie falls further, 0.93 is possibly seen as its next support level.

The Australian currency dipped to a 2-day low of 1.0471 against the kiwi, moving away from an early more than 2-week high of 1.0535. The aussie is poised to test support around the 1.03 region.

Looking ahead, Canada housing starts for January are due at 8:15 am ET.

In the New York session, Canada jobs data for January is set for release.

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