3 March, 2017
The Australian dollar’s run as one of the best performing currencies this year may be coming to an end on the back of weaker commodity prices and rate cut expectations over the past week.
At 7.29pm (GMT) the Aussie dollar was trading at US75.59c down from US76.75c in yesterday’s trading.
Iron ore prices are off almost 4 percent since reaching a 24-month high last week, and coupled together with disappointing export and trade balance figures release earlier today, the writing may be on the wall for the Australian dollar.
The disappointing export figures are mainly attributed to China, Australia’s biggest trading partner with the biggest culprit being a reduced demand for Iron ore.
Any slowdown in China would be disastrous for the Australian economy.
Ever since last week analysts and government officials alike such as Reserve Bank of Australia Governor Philip Lowe ,who noted the investors shouldn’t get used to Australia’s biggest export hanging around the $90 mark,
“I do think that commodity prices are going to come back off again,” Lowe told a parliamentary panel last Friday.
“We shouldn’t start to think that the iron ore price is going to stay around $90.” He added.
Another factor hurting the Australian dollar at the moment against it’s American counterpart is expectations that the RBA will have to lower interest rates too boost inflation, which will bring the benchmark interest rate on par or even lower than in the US,
Paul Dales, chief Australia and New Zealand economist for Capital Economics predicts that interest rates in Australia as well as the Aussie dollar are headed much lower,
“The RBA won’t raise rates in 2017 or likely in 2018, and I wouldn’t be putting much money on a hike in 2019 either. In fact, with the housing market slowing, the labour market weakening and inflation staying below target it’s possible that there will be cuts this year to 1 percent” he said.
“We also think the Australian dollar could fall from US77c today to around US65c because of RBA rate cuts, a stronger US dollar thanks to Trump’s expansionary plans for the world’s biggest economy and falling commodity prices.” he added.
The Gold price has continued to rally today after yesterday's release of consumer price index figures from the US threw into doubt the ability for the US...
The British pound has been well supported over the last few days as speculation that a rebellion within against Prime Minister May's conservative party...
The oil prices is trading higher in today's trading session, following on from yesterday solid gains after a fall in US crude oil inventories and the...
The US dollar has certainly been the success story of this year gaining strongly against all assets classes including gold with global tensions and higher...
After rallying for most of the year against the major currencies the US dollar seems to have stalled over the last week and according to some...
The British pound has now had its worse run since the global financial crisis and according to some analysts the pain may be far from over...
Higher inflation in the US usually translates to rising interest rates which is usually negative for gold, as higher rates mean bigger yields which tends to leave...
With all the uncertainty surrounding the UK at the moment such as political instability as well as the current Brexit negotiations that seem...
With the introduction of sanctions against Iran as well as a reduction in the development in new oil infrastructure, the chances for the highest oil prices in a decade is growing by the day...