Australian Dollar Drops As RBA Lowe Signals Further Easing
May 20 2020 - 11:21PM
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The Australian dollar fell against its major counterparts in the
Asian session on Thursday, after Reserve Bank of Australia's
governor Philip Lowe hinted at the likelihood of further easing to
counter the economic impact of the Covid Crisis.
Speaking at a Finsia webinar, the central bank chief said that
the RBA is ready to scale up its asset purchases to support the
economy.
Lowe cautioned that the future remains unusually uncertain and
confidence is "incredibly fragile."
The negative interest rates are "extraordinarily unlikely," Lowe
said, adding that the "costs exceed the benefits."
Australia's private sector remained in a deep contraction in May
as the impact of the coronavirus, or Covid-19, on the economy
remained severe, according to a survey data from IHS Markit.
The Commonwealth Bank flash composite output index rose to 26.4
in May from 21.7 in April. A score below 50 indicates
contraction.
The aussie dropped to 71.00 against the yen and 0.6549 against
the greenback, from its early highs of 70.49 and 0.6598,
respectively. The aussie is seen finding support around 65.00
against the yen and 0.60 against the greenback.
The Australian currency edged down to 1.6733 against the euro
and 0.9128 against the loonie, off its early highs of 1.6629 and
0.9173, respectively. The aussie may locate support around 1.80
against the euro and 0.88 against the loonie.
The aussie weakened to an 8-day low of 1.0703 against the kiwi
and held steady thereafter. At Wednesday's close, the pair was
worth 1.0731.
Looking ahead, PMI reports from major European economies are due
in the European session.
U.S. weekly jobless claims for the week ended May 16, existing
home sales and leading index for April will be featured in the New
York session.
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