The Australian Dollar continued to fall against all the majors with a lack of economic data out of the country this week providing the currency little support for its’ sliding value.
Economists are suggesting that this fall in the AUD is a correction to the overvalued Aussie Dollar, and the trend may continue to lower levels, especially against the USD.
The only support the AUD found yesterday was against the NZD. Both countries have been impacted by the data out of China in recent weeks, indicating that the second-biggest economy in the world is slowing down. As the largest trading partner to both countries, the signal that the Chinese economy is slowing down significantly impacts both countries. The AUD looked to have lost its’ upward trend against the NZD this week with it falling to a low of 1.092, however yesterday recovered with 0.8% gains with the announcement that Fonterra Cooperative Group Ltd, New Zealand’s largest dairy exporter cut its forecast for milk payout to New Zealand farmers down to $5.30. This is the second reduction in months, with the previous reduction down to $6 made at the end of July proving that pricing has fallen 40 per cent since February.
To further extend the losses on the New Zealand Dollar, the Reserve Bank of New Zealand Governor Brian Wheeler spoke yesterday stating that he believes the current value of the NZD is ‘unjustified and unsustainable.’ Wheeler said that the bank’s analysis indicated that the real exchange rate is well above its sustainable level and also above levels justified by short term business cycle factors’, suggesting that the Reserve Bank will be prepared to intervene to weaken the NZD. The AUD is currently sitting at 1.1082 NZD at 8:30am AEST today.
The USD continues to strengthen against the AUD and it appears the range bound trend that the currency pairing was stuck in from March this year to last week is decidedly broken. The experts predict that the AUD will continue to slide to the low 0.80 US Cent range and this trend seems to be set to continue as the AUD lost 0.75%; this slide continued overnight even with the result of less than positive for USD Core Durable Goods Orders with a result of -18.2% last period was at 22.5%. Unemployment Claims were also released at lower than forecast at 293k, however still an improvement from the previous result of 281K. The AUD is currently sitting at 0.8794 US Cents at 8:30am AEST today.