Australian dollar slides
The local currency is set for a subdued weekly performance as traders wager on a small chance of a cut in the country’s official cash rate.
Last Friday, the Australian dollar was last at 72.29 US cents on Friday after three straight days of losses took it to a three-week trough of 71.92 US cents.
It is now down about one per cent so far this week, erasing all of the gains made the previous week.
The Aussie has stumbled about seven per cent this year as investors use the currency as a proxy for Chinese growth.
And, with China’s outlook clouded by an ongoing trade war with the United States the Aussie has, in turn, suffered collateral damage.
Also weighing on the Aussie, data out earlier this week showed economic growth slowed more sharply than expected last quarter.
“There is every chance that AUD/USD takes a fresh look at the 70.00 level in first-half 2019 and potentially spends some time below,” said Ray Attrill, currency strategist at National Australia Bank.
“There is a lot of focus on Australia’s very weak housing market as prices fall deeper into negative territory; economic momentum is softening relative to NZ; plunging oil prices are negative for Australia’s terms of trade; underlying inflation is not moving closer to the RBA’s target; and Australia faces some political uncertainty and a likely change of government next year.”
Data out on Wednesday showed Australia’s economic growth slowed more sharply than expected last quarter, prompting investors to price in a small chance of cut next year.
In a dinner speech on Thursday, Reserve Bank of Australia Deputy Governor Guy Debelle held out the possibility of a cut in rates, if needed while repeating the Bank’s standard line that the next move in rates was more likely up than down.
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