The Australian dollar is under further pressure today after yesterday’s spectacular plunge which seems to have put to bed any interest rate hike from the Reserve Bank of Australia in the foreseeable future.
The market had been predicting that inflation numbers would finally hit the RBA’s target rate of between 2 and 3 percent but the figures fell well short coming in at 1.8 percent.
Rodrigo Catril, FX Strategist at the National Australia Bank predicts that the chances of further losses for the Aussie dollar are significant and a move down towards US75c is not out of the question.
“The AUD is currently trading at just under the US77c mark and fair value is seen at just under 78 cents, so the pair is well inside its 2.6 cent fair value range,” noted Catril.
“Also this means that despite the recent decline, the AUD is not stretched based on fundamentals suggesting there is still downside risk for the currency.” He added.
Data out of America late yesterday also didn’t help the Australian dollar with the durable goods figure coming in at 2.2 percent against analysts’ expectations for a figure of 1 percent which all but guarantees a rate hike from the US Federal in December.
This will only close the gap on the interest rate differentials between Australia and the US and make the Australian dollar less attractive as an interest bearing investment.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this broker. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this broker. Before deciding to trade foreign exchange you should consider whether you understand how CFDs work, your investment objectives, your level of experience and readiness of taking risk. The possibility exists that you could sustain a loss of some or of all of your initial investments and therefore you should not risk more than you are prepared to lose. Please seek independent financial advice if necessary.
|By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.|