Aussie dollar dips on RBA outlook
(5 October 2011 – Australia) The Australian dollar fell as low as 94.54 US cents, down about half a cent after the Reserve Bank of Australia (RBA) announced it could look at rate cuts as early as November.
News was mixed as earlier in the day, the Aussie received a short-lived boost after Australia boasted its second-largest trade surplus on record in August with a hefty A$3.1 billion.
Exports rose a sharp 8 percent as demand from China and Japan drove exports of iron ore and coal, providing a vital boost to economic growth ahead of the latest bout of turmoil on global markets.
News that Greece would miss deficit targets this year and next year rekindled worries that the country may default on its debt. Franco-Belgian finance group Dexia's warning about its exposure to Greece added to investor worries.
Global stock markets resumed their slide on the news, with some of the biggest falls on Wall Street as the Nasdaq index of technology stocks sank more than 3 percent.
Westpac Institutional Bank senior currency strategist Sean Callow said the dollar could fall below 90 US cents sometime in the next few weeks.
‘‘There is no obvious reason for (the Aussie) to find a base soon if you look at commodity prices, interest rate differentials and the global environment in general,’’ said Mr Callow. ‘‘It’s tough to make a case for the Aussie to hit a low soon.’’
Mr Callow noted that commodities prices - key for the value of Australia's exports - are near a one-year low. The Reuters-Jefferies index of commodities prices sank 1.7 points to 296.4 overnight, taking it to a level not seen since November 2010.
Exports rose a sharp 8 percent as demand from China and Japan drove exports of iron ore and coal, providing a vital boost to economic growth ahead of the latest bout of turmoil on global markets.
News that Greece would miss deficit targets this year and next year rekindled worries that the country may default on its debt. Franco-Belgian finance group Dexia's warning about its exposure to Greece added to investor worries.
Global stock markets resumed their slide on the news, with some of the biggest falls on Wall Street as the Nasdaq index of technology stocks sank more than 3 percent.
Westpac Institutional Bank senior currency strategist Sean Callow said the dollar could fall below 90 US cents sometime in the next few weeks.
‘‘There is no obvious reason for (the Aussie) to find a base soon if you look at commodity prices, interest rate differentials and the global environment in general,’’ said Mr Callow. ‘‘It’s tough to make a case for the Aussie to hit a low soon.’’
Mr Callow noted that commodities prices - key for the value of Australia's exports - are near a one-year low. The Reuters-Jefferies index of commodities prices sank 1.7 points to 296.4 overnight, taking it to a level not seen since November 2010.
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