Despite the release of largely underwhelming US economic data set, including US Q3 GDP of just 1.5%, the Australian dollar remained under pressure overnight as continued softness in the iron ore price and heightened expectations for a further rate cut from the RBA next week weighed on the currency throughout.
As at 8.30am AEDT, the AUD/USD trades at .7078, the lowest level seen since October 6. On the back of yesterday’s hawkish US FOMC policy statement and weak Q3 CPI figure released on Wednesday, the pair are currently down around 2% for the week.
“AUD is the worst performing major currency versus the USD overnight,” wrote Elias Haddad, senior currency strategist at CBA in his morning note.
“Falling iron ore prices, rising risks of more RBA rate cuts and the sharp rally in global bond yields dragged AUD lower.”
Haddad suggests that the weakness in the Aussie is likely to continue in the sessions ahead, pointing to the likelihood of the AUD/USD sustaining a move below 0.7000 in the period ahead.
Looking ahead to Friday’s Asian session, most attention will be on the Bank of Japan’s latest monetary policy decision, along with updated economic forecasts, due out after lunchtime AEDT. Some suggest that the BOJ may expand their annual monetary base expansion beyond the current 80 trillion yen figure currently targeted by the bank. While the majority believe the BOJ will leave policy unchanged, the event is likely to create volatility across currency markets throughout the course of Asian trade.
Before the BOJ hands down its policy decision, markets will also receive Japanese unemployment and inflation data earlier in the session.
On the domestic front private sector credit figures for September will be released at 11.30am AEDT, although it is unlikely to be market moving.
Here’s the Aussie dollar scoreboard.
- AUD/USD 0.7078 , 0.0012 , 0.17%
- AUD/JPY 85.71 , 0.13 , 0.15%
- AUD/CNY 4.4982 , 0.0038 , 0.08%
- AUD/EUR 0.6442 , -0.0001 , -0.02%
- AUD/GBP 0.4620 , 0.0002 , 0.04%
- AUD/NZD 1.0564 , 0.0004 , 0.04%