On Friday Australian dollar continued its slide against the US peer, as market players raised bets that Reserve Bank of Australia (RBA) will reduce the base interest rate next month from the current record low.
AUD/USD slid to a session low at 0.9133 at 0:50 GMT. At 8:17 GMT the pair was trading at 0.9155, still down by 0.38% for the day. Support was expected at July 10th low, 0.9094, while resistance was to be encountered at June 11th high, 0.9475.
Aussie pared its first weekly gain in four weeks against the greenback, as bets rose that possible interest rate cuts by RBA were on the horizon, because business conditions were not positive and Unemployment rate in the country rose to its highest level since September 2009, 5.7% during June. According to some experts, there was a 60% probability Australian central bank to reduce the base interest rate to 2.50% at its meeting next month.
Australian currency has declined by 12% this year amid prospects for a divergence in monetary policy with the United States, as this could eliminate Australias yield advantage.
“The broader-term Aussie dollar weakness is going to continue,” said Michael Judge, a Sydney-based dealer at OZForex Pty Ltd., cited by Bloomberg. “If you see jumps up to 92, 92 1/2 U.S. cents, that’s a good sell signal for the Aussie.”, he also added.
Meanwhile, US dollar was put on heavy selling pressure, after on Wednesday Federal Reserve Bank Chairman Ben Bernanke said, that central bank’s policy should remain accommodative, even after the minutes of FED’s June meeting revealed that there were debates, regarding a possible exit to the stimulus program. According to FED minutes, half of the 19 members of FOMC voted in favor of terminating monthly asset purchases by the end of this year. Additionally, regional Federal Reserve Bank presidents may offer clues today on the timing of a possible tapering of stimulus program in the United States. St. Louis Fed President Jim Bullard, Philadelphia Fed President Charles Plosser and San Francisco Fed President John Williams are all expected to speak later in the trading Friday.
Australian dollar has erased 10% in the past three months, the worst performing currency among 10 developed nation currencies, tracked by Bloomberg Correlation-Weighted Indexes. At the same time, US dollar has increased its value by 4.2%, Bloomberg imparted.
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