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AUD down on US housing data
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Published on 22.06.2015 19:29

The Australian dollar is trading lower today after strong real estate data out of the US and a negative report from one of the world’s largest asset managers that the currency is headed below US70c.

At the close of trade on Monday, the Aussie dollar was fetching US77.26c down from US77.73c in yesterdays close.

Existing home sales in the US rose to 5.1% well above analysts’ expectations of a 4.4% rise boosting the US dollar against major currencies and giving the US Federal reserve something to think about on the question of an interest rate rise.

A report form Blackrock, the world’s largest asset noted that the Australian dollar is likely to fall to US70c or even lower as the RBA is forced to cut interest rates further in order to stimulate growth.

While the Reserve Bank of Australia is a “reluctant cutter,” weak business capital spending will probably push policy makers into lowering the cash rate by a quarter point in either September or October from a record-low 2 percent, said Stephen Miller, head of Australian fixed income at the world’s largest asset manager. They could cut again in 2016 if the situation fails to improve, he said.

 “The economy has some really challenging headwinds,” Miller also added.

“70 cents, I still see that as a reasonable target by the end of this year and I think it probably goes lower in 2016.”

The Australian dollar is trading lower today after strong real estate data out of the US and a negative report from one of the world’s largest asset managers that the currency is headed below US70c.

At the close of trade on Monday, the Aussie dollar was fetching US77.26c down from US77.73c in yesterdays close.

Existing home sales in the US rose to 5.1% well above analysts’ expectations of a 4.4% rise boosting the US dollar against major currencies and giving the US Federal reserve something to think about on the question of an interest rate rise.

A report form Blackrock, the world’s largest asset noted that the Australian dollar is likely to fall to US70c or even lower as the RBA is forced to cut interest rates further in order to stimulate growth.

While the Reserve Bank of Australia is a “reluctant cutter,” weak business capital spending will probably push policy makers into lowering the cash rate by a quarter point in either September or October from a record-low 2 percent, said Stephen Miller, head of Australian fixed income at the world’s largest asset manager. They could cut again in 2016 if the situation fails to improve, he said.

 “The economy has some really challenging headwinds,” Miller also added.

“70 cents, I still see that as a reasonable target by the end of this year and I think it probably goes lower in 2016.”


Andrew Masters

Analyst

The power of leverage is the power of Forex.
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