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Weekly Roundup: RBA interest rate cut and weakening trade weigh on Australian dollar

currency-newsWeekly Roundup: RBA interest rate cut and weakening trade weigh on Australian dollar
Concerns over the outlook of the Australian economy continued to grow over the course of the last week, driven by a narrowing of April’s trade surplus and global trade anxiety.

Sharp contractions in home loans and investment lending also weighed on the Australian dollar ahead of the weekend, suggesting that economic momentum is continuing to decline.

With the Reserve Bank of Australia (RBA) looking increasingly likely to cut interest rates to a fresh low before the end of the year, in spite of Tuesday’s rate cut, AUD exchange rates trended lower.

Although the first quarter New Zealand terms of trade index showed a solid rebound this was not enough to keep the New Zealand dollar on a positive footing for long, meanwhile.

Any slowdown in the ANZ truckometer would increase the odds of further Reserve Bank of New Zealand (RBNZ) easing, limiting the potential for NZD exchange rate gains.

Demand for the Australian dollar could pick up on Thursday, however, as forecasts point towards an improvement in May’s unemployment rate.

As the labour market has proven a major cause for concern for RBA policymakers any improvement here could limit the case for another rate cut, offering a boost to AUD exchange rates.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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