The Australian dollar dropped today, extending its decline for the second session, as economic data and comments of central bank’s chief made Forex traders concerned about the currency’s ability to sustain its recent gains.
Reserve Bank of Australia Governor Glenn Stevens was speaking today at the Econometric Society Australasian Meeting and the Australian Conference of Economists. He said regarding the exchange rate:
But lest there be any uncertainty about this, let me be clear, again, that the exchange rate remains high by historical standards. There is little doubt that significant parts of the trade-exposed sectors still find it quite âuncomfortableâ: it continues to exert acute pressure for cost containment, productivity improvement and business model change.
He also expressed his outlook for the Aussie’ performance:
Nonetheless, we think that investors are under-estimating the likelihood of a significant fall in the Australian dollar at some point.
Australian retail sales unexpectedly fell 0.5 percent in May, adding to the woes of the currency. Not every news were bad as building permits rose 9.9 percent in May, exceeding economists’ expectations by a wide margin, but this did not help the Australian dollar very much.
AUD/USD tumbled from 0.9441 to 0.9378, and AUD/JPY sank from 96.09 to 95.52 as of 5:16 GMT today. EUR/AUD advanced from 1.4460 to 1.4556.
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