Australian Dollar Reaches Six-Month Low

The Australian dollar fell today, following yesterday’s drop to the six-month low against the US dollar and the Japanese yen, as signs of slowing economic growth in the United States added to worries caused by the European crisis.
US gross domestic product rose 1.9 percent in the first quarter of 2012, according to the preliminary estimate, following the 3.0 percent advance in the fourth quarter of 2011. Signs of slowdown in the USA hurt traders’ mood that was already downbeat because of the problems in Europe. The MSCI World Index of shares dropped 0.3 percent yesterday. The Standard & Poor’s GSCI Index, which tracks 24 commodities, fell as much as 1.2 percent.
The yield on Australian 10-year bonds fell 8 basis points to the record low of 2.838 percent. The probability of new interest rate cut from the Reserve Bank of Australia becomes increasingly high with every day that bad news come out. In such an environment, the Aussie has no option but go down.
AUD/USD fell from 0.9729 to 0.9707 as of 2:25 GMT today, following yesterday’s drop to 0.9373 — the lowest rate since November 25. AUD/JPY traded near its opening level of 76.22 today after it slid yesterday to 75.74 — the lowest since November 25. EUR/AUD was up from 1.2701 to 1.2716.

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