The Australian dollar sank versus other most-traded currencies today as Australia’s economic growth missed expectations, leading to speculations that the central bank may cut interest rates later this year.
The Australian Bureau of Statistics reported that gross domestic product rose 0.2% in the December quarter from the previous three months on a seasonally adjusted basis. That is a slowdown from the previous quarter’s rate of growth of 0.3%. Analysts had predicted a faster growth by 0.5%.
Previously, the Reserve Bank of Australia has already disappointed markets, signaling that an interest rate cut is as likely as a hike. Yet today’s underwhelming data led to speculations that the central bank will lean more towards cutting rates. Indeed, even before the report Westpac Banking Corporation was predicting that the RBA will make actually two cuts this year.
Speech delivered by RBA Governor Philip Lowe overnight was relatively optimistic, but markets largely ignored it.
AUD/USD tanked from 0.7083 to 0.7029 as of 12:40 GMT today, trading near the lowest level since the big jump on January 4. EUR/AUD rallied from 1.5959 to 1.6075. AUD/JPY declined from 79.25 to 78.61.
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