Australian Dollar Falls After RBA Lowe’s Comments

The Australian dollar weakened against other major currencies in the pre-European session on Thursday, after the Reserve Bank Governor Philip Lowe hinted that the Australian central bank could be far from considering any monetary policy tightening.

While addressing to the American Chamber of Commerce in Australia in Perth, the RBA Governor Lowe said the global interest rates rise did not have automatic implications for Australia, but an increase would be visible over time.

Lowe also warned that a rise in global interest rates could have implications for debt-laden Australian households and the wider economy.

Meanwhile, Asian stock markets traded lower after the U.S. Federal Reserve left interest rates unchanged as widely expected, but struck a hawkish tone by signaling another rate hike is likely this year. The Fed also revealed that it will begin shrinking its $4.5 trillion balance sheet in October.

In the pre-European session, the Australian dollar fell to nearly a 1-month low of 1.0881 against the NZ dollar, from yesterday’s closing value of 1.0915. The aussie may test support near the 1.07 region.

Against the U.S. and the Canadian dollars, the aussie dropped to 2-day lows of 0.7962 and 0.9829 from yesterday’s closing of 0.8031 and 0.9894, respectively. If the aussie extends its downtrend, it is likely to find support around 0.78 against the greenback and 0.97 against the loonie.

Against the yen and the euro, the aussie slid to 89.53 and 1.4927 from an early near 2-year high of 90.30 and a 5-week high of 1.4792, respectively. On the downside, 88.00 against the yen and 1.51 against the euro are seen as the next support level for the region.

Looking ahead, European Central Bank’s economic bulletin and U.K. public sector finance data for August are due to be released later in the day.

At 5:30 am ET, European Central Bank Board member Peter Praet chairs the policy panel at the ECB conference “Low inflation: Lessons from the past! Lessons for the future?” in Frankfurt.

In the New York session, Canada wholesale sale data for July, U.S. weekly jobless claims for the week ended September 16, U.S. leading indicators for August, house price index for July, and Eurozone consumer confidence index for September.

At 9:30 am ET, European Central Bank President Mario Draghi is scheduled to deliver opening remarks at the European Systemic Risk Board annual conference, in Frankfurt.

by RTT Staff Writer

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