Australian Dollar has fallen for 11 straight days

The Australian Dollar has fallen for 11 straight days for the longest losing streak since 1975 and to a 6-month low, according to Bloomberg. It is losing ground not only because of commodity price declines, but also the outlook for further Australian Interest Rate Cuts.

Bloomberg says “The Reserve Bank of Australia said yesterday that a ‘significant moderation’ in domestic demand would give it room to lower borrowing costs…

Foreign Exchange Traders are certain the RBA will lower its 7.25pc base interest rates by at least a quarter-percentage point when it meets next on Sept. 2,” according to the Credit Suisse swap analysis. The RBA will cut by a total of 97 bp over the next 12 months, or effectively 1%. In July, the analysis called for cuts of half that.

This makes the Australian Dollar less desirable against its commodity-currency competitor, the Canadian dollar, where policy decisions are more closely tied to those in US and thus already at relatively low interest rates.

Bye for Now

Barbara Rockefeller

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