The Australian dollar has fallen sharply since the Reserve Bank’s decision on Tuesday to keep interest rates on hold.
Market snapshot at 8:15am (AEDT):ASX SPI futures +0.5pc at 6,263, ASX 200 (Tuesday’s close) +0.4pc at 6,242AUD: 70.7 US cents, 53.82 British pence, 63.1 euro cents, 78.68 Japanese yen, $NZ1.05US: Dow Jones -0.3pc at 26,179, S&P 500 flat at 2,867, Nasdaq +0.25pc at 7,849Europe: FTSE 100 +1pc at 7,391, DAX +0.6pc at 11,755, CAC +0.3pc at 5,423, Euro Stoxx 50 +0.3pc at 3,396Commodities: Brent crude +0.6pc at $US69.44/barrel, spot gold +0.4pc at $US1,292.75/ounce, iron ore +1.4pc at $US89.89/tonne
It was buying 70.69 US cents at 7:15am (AEDT), a significant drop from yesterday’s 71.11 US cents.
The dollar also experienced steep falls to 53.83 British pence (-0.6 pc), 63.09 euro cents (-0.5 pc), and 78.72 Japanese yen (-0.6pc).
Currency traders sold the Australian dollar after noticing a “dovish” change in language in the RBA governor Philip Lowe’s post-meeting statement.
In particular, analysts noticed Dr Lowe did not mention the Australian economy growing at 3 per cent this year — a subtle omission compared to his previous statements — and spoke of a divergence between labour market and GDP outcomes.
“The [Reserve] Bank has acknowledged for the first time that the housing downturn is weighing on consumption and we also got a re-write of the final paragraph [of the statement] for the first time in ages,” NAB foreign exchange strategist Rodrigo Catril said.
He noted an important change in the final paragraph of the RBA governor’s post-meeting statement:
“The board will continue to monitor developments and set monetary policy to support sustainable growth in the economy and