Australian dollar lost value against its US counterpart for a second day in a row, after the Reserve Bank of Australia (RBA) said a weaker currency should support exporters, while the uncertainty over Feds monetary policy also weighed on sentiment.
AUD/USD slid to a session low at 0.9347 at 7:31 GMT, after which consolidation followed at 0.9355, falling 0.40% for the day. Support was to be received at September 17th low, 0.9286, while resistance was to be encountered at September 19th high, 0.9524.
The Aussie retreated for a fourth day in five against the greenback, after the RBA said in its semiannual financial stability review, that a weaker currency “should provide support to some trade-exposed sectors.” This urged nations banks to keep loan standards as they remained in good health, while households’ risk appetite seemed to improve.
In addition, on Tuesday the Australian and New Zealand dollars have been under selling pressure, as a September 30th deadline loomed to prevent a US government shutdown, according to Bloomberg. On Monday the Senate of the United States began considering a measure the House passed on September 20th, that cuts off money for President Barack Obama’s health-care law and finances the federal government through the middle of December. With government funding set to expire on October 1st and the Treasury expected to lose its ability to borrow funds in mid-October, federal offices have begun considering the possibility of a shutdown.
Also, the Australian government started selling inflation-linked securities due in 22 years, with the purpose to extend the maturity of its debt, according to the Australian Office of Financial Management.
Traders saw a 55% probability that the Reserve Bank of Australia will reduce additionally its benchmark interest rate from the already record low level of 2.5% by April next year. The odds of such an action were 49% yesterday.
Meanwhile, market players remained wary, after New York Federal Reserve President William Dudley expressed his approval of the central bank’s decision to leave its stimulus program without change last week. He said that US economy “still needs the support of a very accommodative monetary policy.”
Concerns over the US recovery outlook appeared, after the surprising decision by the Federal Reserve Bank not to taper its stimulus program in September at its meeting last week. Another indicator to add to these concerns was the US consumer confidence, as it decreased at a faster pace than projected in September. Its corresponding index slowed down to 79.7 in September from the revised up reading of 81.8 in August.
Elsewhere, the Aussie was lower against the euro, with EUR/AUD cross gaining 0.57% for the day to trade at 1.4432 at 8:27 GMT. AUD/NZD pair was advancing 0.12% to trade at 1.1360 at 8:28 GMT.