The Australian dollar is trading lower today after a statement yesterday by US fed President Janet Yellen where she signaled that a cut in US interest rates was still on the table.
AT (GMT) the Aussie dollar was trading at US79.53c down from US80.04c in yesterday’s trade.
Blaming the slowdown on the unusually harsh winter the Fed noted that it expects the economy to return to expansion mode with inflation gradually moving towards the target rate of 2 % which many believe will be the catalyst for lifting rates.
“Although growth in output and employment slowed during the first quarter, the committee continues to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labour market indicators continuing to move toward levels the committee judges consistent with its dual mandate.” The statement noted.
“The committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labour market and is reasonably confident that inflation will move back to its two per cent objective over the medium term,”
Easy forex currency dealer Andreas Tjahja expects the Australian dollar to consolidate and gear up ready ahead of next week's Reserve Bank board meeting and interest rate decision.
'That's partly because the market is very uncertain at the moment what's going to happen with the RBA,' he said.
Analysts are divided 50 – 50 on whether the reserve bank of Australia will cut rates next week following on from their 25 basis points reduction in Febuary..
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