Dollar sinks to new low

 

moneyThe Australian dollar sunk to new three and a half year lows overnight on the back of weaker than expected employment data.

At 0700 AEDT on Friday, the Australian dollar was trading at 88.15 US cents, up from 88.14 cents on Thursday.

The Australian dollar dipped as low as 87.77 US cents overnight – its lowest point since July 2010 – after December labour force figures showed the economy lost 68,000 full-time jobs in 2013.

The monthly unemployment rate remained steady at 5.8 per cent but only because the participation rate – the proportion of the population with a job, looking for one or who are ready to start work – fell to 64.6 per cent.

The “horrid” figures raised fears of further rate cuts by the Reserve Bank of Australia, BK Asset Management MD Boris Schlossberg said.

“The Australian unemployment rate is deceptively low. If the participation rate had remained at the 2011 average of 65.5 per cent, the unemployment rate would have actually risen to 7.1 per cent,” Schlossberg said.

“The dour labour data suggest that the RBA may now consider another rate cut – perhaps as soon as the next meeting, in February.

“The news sent the Aussie tumbling through the key support at 88.50 US cents and well below the 88 cent figure where it finally found some buyers at 87.70 US cents.

“Any rebound is likely to be short lived in nature as the fundamental case for the Aussie has unequivocally turned bearish after Thursday’s labour report.”

AAP

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