Aussie dollar tumbles after RBA chief hints at interest rate cut

Related Story: Rate cuts as likely as rises as Reserve Bank governor eyes falling house prices

The Australian dollar has tumbled sharply after the head of the Reserve Bank signalled it might cut interest rates due to growing economic risks.

Markets at 8:10am (AEDT):ASX SPI futures +0.3pc at 5,988, ASX 200 (Thursday’s close) +0.3pc at 6,026AUD: 71.16 US cents, 55.02 British pence, 62.6 euro cents, 78.26 Japanese yen, $NZ1.04US: Dow Jones -0.1pc at 25,390, S&P 500 -0.2pc at 2,732, Nasdaq -0.4pc at 7,375Europe: FTSE 100 -0.1pc at 7,173, DAX -0.4pc at 11,325, CAC -0.1pc at 5,079, Euro Stoxx 50 -0.1pc at 3,210Commodities: Brent crude +1.1pc at $US62.63/barrel, spot gold -0.6pc at $US1,306.66/ounce

RBA governor Philip Lowe said the chances of a rate hike or cut are now “evenly balanced”, in a stunning reversal that caught investors off-guard.

“Looking forward, there are scenarios where the next move in the cash rate is up and other scenarios where it is down,” he told reporters on Wednesday afternoon.

Dr Lowe cited the fall in property prices — particularly in Sydney and Melbourne — and the unresolved US-China trade war to be among the biggest risks to the local economy.

For the last year, the central bank had maintained that the next move in rates was likely to be an increase.

The dollar fell by a steep 1.7 per cent against the greenback, down to 71.1 US cents by 7:30am (AEDT).

Prior to Mr Lowe’s speech, the local currency was buying 72.4 US cents.

It also dropped substantially to 54.94 British pence, 62.55 euro cents and 78.27 Japanese yen.

In local economic news, today’s focus will be National Australia Bank’s business confidence report for the December quarter.

Meanwhile, the local share market is expected to

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