AUD drops after RBA cautions on strong currency

November 4, 2013

The Australia dollar was soggy today after being hit lower on remarks from the Australian central bank. The Reserve Bank of Australia announced it left its key interest rate at 2.5 percent but said that the value of the currency is too high for a stable economic recovery.

This caused a selloff in AUD, which fell to a session low of $0.9462 after having hit a high of $0.9520.

The euro eased about 1 percent against the US dollar, hovering near a seven-week low, to end the Asian session at $1.3496.

A speech by ECB Chief Mario Draghi later today is keeping market participants cautious in case he makes dovish comments. Also the expectation of a rate cut by the ECB before the end of the year is keeping the single currency under pressure.

The yen gained during the Asian session on safe haven demand. USDJPY dropped from 98.68 to around 98.50 yen. The greenback came under pressure after some comments from Federal Reserve officials that signaled the Fed may not scale back stimulus before the end of this year. The current bond buying program is negative for the USD.

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