The Australian dollar is trading lower today after a sharp decline in copper prices overnight pressured the currency.
At 11.09pm (AEDT) the Australian dollar is trading at US81.25 cents down from US81.65 cents in yesterday’s trade.
Copper, Australia’s fifth biggest export fell around 6% to $2.49 a pound, a level not seen since 2009 as global demand for the commodity, especially from China remains uncertain.
The price of copper has held up pretty well considering the drop in other key commodities such as oil and Iron ore, Australia’s biggest export, but looking forward we may see further falls according to Ivan Szpakowski, an analyst at Citigroup Inc who noted,
“People have seen oil prices decline so much and now they’re targeting other commodities. Copper is falling faster than most other commodities because it’s the one that is played by the macro investors and by people who are looking at the broader picture rather than commodity fundamentals.”
One of the disappointing stories in the Australian economy over the last year has been the rising unemployment rate which now sits at a 12 year high of 6,3%.
The sharp fall in copper prices is starting to filter through to the job market with gold and copper mining company PanAust announcing plans to cut 182 jobs from its workforce as part of a business review due to a slump in copper prices.
“This is bad news for the Aussie dollar and the Australian economy as a whole” noted analysts at Fibogroup forex brokers
“As commodity prices like Iron ore and copper fall further as most analysts predict we can only expect further job losses in the mining sector which in turn will put more downward pressure on the Australian dollar”.
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