The Australian dollar has taken a tumble in today’s trading session after a less than enthusiastic speech from the RBA had investors predicting that an interest rate hike was now off the table.
The currency dived around 1 percent after comments from Reserve Bank of Australia governor Philip Lowe on the state of the Australian economy and the central banks outlook.
They noted that the Australian economy is expected to strengthen gradually over time, but inflation remains weak on the back of slow wage growth and an ever-growing number in household debt.
"I think those people in the market who are hoping or looking for the Reserve Bank to be a little more hawkish will probably be disappointed, and that's why we've seen the Aussie dollar come off," noted Gareth Aird, senior economist at Commonwealth Bank of Australia
"The central banks that have gone to a slightly more hawkish stance more recently, they're all at a different place than what the Reserve Bank is," he added.
After last week’s bullish speeches from Bank of England Mark Carney and ECB President Mario Draghi the market was expecting the same from the RBA on the back of improving employment figures and overall business confidence.
This may be now the start of a reversal in trend for the Australian dollar as some had been expecting a rate hike in the not too different future, but with the RBA still concerned about inflation this option might be off the table for the time being.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% 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. 72% 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.|