The Australian dollar fell today, dragged down by a range of fundamentals, including risk aversion and prospects for additional monetary easing. Macroeconomic data in China, Australia’s biggest trading partner, was mixed, giving no support to the Aussie. But the Australian currency was attempting to recover, and it even managed to gain on some of its rivals, including the US dollar.
Philip Lowe, Governor at the Reserve Bank of Australia, was testifying before the House of Representatives’ Standing Committee on Economics, in Canberra. He signaled in the opening statement that the RBA is ready to ease monetary policy further in case developments in inflation and employment warrants it:
In the central scenario that I have sketched today, inflation will be below the target band for some time to come and the unemployment rate will remain above the level we estimate to be consistent with full employment. While this remains the case, the possibility of lower interest rates will remain on the table. The Board is prepared to ease monetary policy further if there is additional accumulation of evidence that this is needed to achieve our goals of full employment and inflation consistent with the target.
Meanwhile, the National Bureau of Statistics of China released reports on the Consumer Price Index and the Producer Price Index. The CPI rose 2.7% in July from a year ago, while the PPI fell 0.3%. Analysts were expecting the same performance as in the previous month, an increase of 2.7% and no change respectively.
AUD/USD opened at 0.6800, dropped to the daily low of 0.6777, but bounced to 0.6807 by 12:22 GMT today. EUR/AUD was up from 1.6430 to 1.6450 but retreated from the session maximum of 1.6506. AUD/JPY traded at 72.01 after opening at 72.16 and falling to the session low of 71.66.
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