The Aussie dollar has closed lower on 12 of the last 14 weeks.
While some part of that has been an outflow of investors from Australia as they seek better returns in other markets a big part of the sell off has been because of the aggressive verbal intervention of the RBA Governor and his Board.
Today we heard from RBA Governor and former head of the Australian Industry Group, Heather Ridout, who told the Wall Street Journal that the Aussie hadn’t fallen far enough and a price “around US$0.80 would be a fair deal for everybody.”
The Aussie reacted by trading down to a new 3 and a half year low of 0.8687 before rallying a little to sit at 0.8710.
The RBA is actively trying to talk the Aussie dollar down because it is concerned that up until around 3 months ago the Aussie traders weren’t reacting to the deterioration in the terms of trade in the manner they should have been – by selling.
It’s Friday night before a public holiday in Australia which could make trading thinner than normal given the extra day traders need to hold any positions instituted tonight. So, if the bears want to push the Aussie lower they have just received all the ammunition they need.
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