The Australian dollar continued to slide in overnight trade, falling to as low as .7243 in recent trade, a level not seen since early June this year.
Here’s the scorecard as at 6.40am AEDT:
- AUD/USD 0.7241 , -0.0063 , -0.86%
- AUD/JPY 84.98 , -0.86 , -1.00%
- AUD/CNH 5.0178 , -0.052 , -1.03%
- AUD/EUR 0.6960 , -0.0013 , -0.19%
- AUD/GBP 0.5840 , 0.0014 , 0.24%
- AUD/NZD 1.0443 , 0.0019 , 0.18%
The AUD/USD has now lost 3.7% since the US Federal Reserve lifted interest rates last week, extending the decline from the US election on November 8 to 6.8%.
It is now also down 0.4% for the year.
After attempting a move higher in early European trade, the AUD/USD quickly went into reverse as North American markets got underway, falling from a high of .7312 to where it currently trades.
Technical selling, renewed US dollar strength, concerns about Chinese commodity demand and continued pessimism towards the prospect of Australia maintaining its AAA credit rating with Standard and Poor’s were all cited as factors behind the reversal in the Aussie.
Looking ahead to Tuesday’s session in Asia, movements in the Aussie are likely to be dictated by two events in particular, both of them involving central banks.
The first, at 11.30am AEDT, will be the release of the minutes of the Reserve Bank of Australia’s December monetary policy meeting.
While dated — the meeting did occur two weeks ago — there’s still likely to be plenty of interest in what the board said relating to the domestic economy, housing and labour markets, particularly given this meeting was held one day before the release of Australia’s weak Q3 GDP report.
Outside of the RBA, the others to focus on will be the Bank of Japan who will announce its final monetary policy decision of the year at some point this afternoon.
While few expect that the bank will adjust monetary policy settings, the subsequent movements in the Japanese yen following the decision are often influential on the US dollar index in Asia, hence those seen in the Aussie dollar.
There’s no set time for the release, but it tends to arrive around 2pm AEDT if there’s been no change in policy direction.
Outside of the double-dose of central bank action in Asia, the rest of the economic calendar, including later in the session, is quiet, ensuring that sentiment and position adjustments ahead of the New Year will continue to dominate movements in markets, including currencies.