Aussie Dollar-Where To From Here?

Posted on Posted in Daily Blog Post

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The Aussie dollar has lost almost 6 cents since peaking out near 97.30 US cents in October. Recently, Reserve Bank of Australia has stepped up its rhetoric about the currency which need to fall in order to boost the down turn economy (due to cooling commodities sectors).

Yesterday, it hit 91.20 and now is on technical rebound to possible peak at 92.20-40 before accelerating lower again. Various technical analyses indicate that it may continue to retest the low again at 88.90. Read the charts below.

Yesterday, RBA Deputy Governor Philip Lowe said he expected to see a lower Australian dollar over time and reiterated the central bank would not rule direct intervention in or out.

And for the last few months Reserve Bank officials are stepping up their efforts to talk down the Australian dollar.

Source: SMH dated 22nd November:

Here are some of the recent attempts by the RBA to talk the dollar down after it started to climb above its year's low in late August.

October 1: Glenn Stevens' statement on October monetary policy
"A lower level of the currency than seen at present would assist in rebalancing growth in the economy."
October 18: Glenn Stevens' speech to the Australian British Chamber of Commerce
"[A] lower currency than this would be helpful in rebalancing the growth sources of the economy."
October 29: Glenn Stevens' speech at Citi investment conference
"It seems quite likely that at some point in the future the Australian dollar will be materially lower than it is today."
November 5: Glenn Stevens' statement on November monetary policy
"The Australian dollar, while below its level earlier in the year, is still uncomfortably high."
November 8: Statement on Monetary Policy
"A lower exchange rate is likely to be needed to achieve balanced growth in the economy."
November 8: Assistant governor Guy Debelle's speech to the IMF Research Conference
"In Australia's case, an exchange rate appreciation that is not in line with the fundamentals, if persistent enough, can lead to Dutch Disease."
November 19: Minutes of November RBA board meeting
"[T]he Australian dollar, while below its level earlier in the year, remained uncomfortably high. Members noted that a lower level of the exchange rate would likely be needed to achieve balanced growth in the economy."
November 21: Glenn Stevens' speech to the Australian Business Economists' Annual Dinner
"[W]e remain open-minded on the issue. Our position has long been, and remains, that foreign exchange intervention can, judiciously used in the right circumstances, be effective and useful."

AUSSIE DOLLAR DAILY CHART

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Australian Dollar 4 HOURLY CHART

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