The Australian dollar is sharply lower today on the back of tumbling oil prices and expectations that the US Federal Reserve will raise interest rates next week, is all but certain.
At 9.11pm (GMT) the Aussie dollar was trading US72.62c down from US73.34c in close of trade on Friday.
Opec, the world’s biggest oil cartel, refused to cut production in their latest meeting which sent the oil price tumbling 5 percent to under US$40 a barrel and piling pressure on commodity currencies like the Australian dollar which fell sharply back below the US73c mark.
There may be further falls in oil as Saudi Arabia attempts to push the price lower in anticipation that the falling price will drive the shale oil explorers from the US out of Business, which is the reason there is such a glut of oil on the market.
Also affecting the Aussie dollar was the latest non-farm payrolls figure out of the US on Friday which came in above expectations for a 2nd straight month and giving the US Fed enough reason to hike interest rates next month for the first time since 2008.
The main question now is not when but how gradual they will raise rates, with some noting that the US economic recovery could be severely hampered if the FED move too quickly.
Data out tomorrow includes the National Australia Bank’s business conditions survey due out at 12.30am (GMT), and key import, export and trade balance figures released from China at 2.00am (GMT) and are likely to be the main drivers of the Australian dollar.
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