Australian dollar traded little changed against its US rival on Friday and was set for its longest streak of weekly losses since before it was floated 30 years ago after Reserve Bank of Australia (RBA) Governor Glenn Stevens repeated that national currencys exchange rate was too high and following Federal Reserves decision to scale back its monetary stimulus.
AUD/USD touched a session high at 0.8888 at 2:05 GMT, after which consolidation followed at 0.8870, up 0.05% for the day. Support was likely to be received at December 19th low, 0.8823, while resistance was to be encountered at December 18th high, 0.8944.
Australian dollar has depreciated 1.2% this week against the greenback, marking its ninth consecutive weekly decline, which appears to be the longest series since the 14-week drop to August 1982. The Aussie became freely floated in December 1983.
RBA Governor Glenn Stevens said on December 18th that an exchange rate above 90 U.S. cents was probably not “sustainable”. “Because inflation has been consistent with the target, the board has been quite comfortable in easing policy by a significant amount,” RBA Governor Stevens said in remarks to a parliamentary committee in Canberra on Wednesday. “The board has maintained an open mind about whether we may need to lower interest rates further. At this point, however, there are few serious claims that the cost of borrowing per se is holding back growth.”
Meanwhile, at its policy meeting ended on Wednesday the Federal Reserve Bank decided to leave its benchmark interest rate range unchanged at 0.00%-0.25%, but said that it introduces a reduction of its monthly monetary stimulus by 10 billion USD to 75 billion USD since January.
However, the US dollar came under pressure after a report by the US Department of Labor revealed that the number of people, who filed for unemployment benefits during the week ended December 14th, increased to 379 000 from 369 000 in the previous week. Analysts had projected that initial jobless claims will decrease to 332 000.
In addition, the Federal Reserve Bank of Philadelphia reported that its manufacturing index climbed to a reading of 7.0 in December from a reading of 6.5 in November, but below expectations of an advance to a value of 10.0 during the current month. Overall business activity in the region contracted considerably in comparison with October, when the Fed index stood at 19.8. Manufacturing sector in the United States has been expanding during this year, but not at a steady pace. Activity in the region of New York continued to increase in December, but also below forecasts, a report showed on Monday.
Elsewhere, the Aussie was higher against the euro, with EUR/AUD cross down 0.22% on a daily basis to trade at 1.5378 at 7:48 GMT. AUD/NZD pair was steady, up 0.03% to trade at 1.0826 at 7:51 GMT.