The Australian Dollar has suffered a dramatic selloff overnight against all the majors with positive sentiment flowing through to the currency markets after the Republicans retook the senate after 6 years in the wilderness.AUDUSD broke a 4 week range that had given a glimmer of hope to Aussie Dollar bulls, unfortunately this was shattered last night. AUDUSD has now broken significant support with clear air all the way down to 0.8000
There has been an ongoing wave of political discontent in the U.S with the way President Obama and his Democratic led government have been managing the economy amongst other things. This now gives the Republicans much more political sway when it comes to passing new laws and reforms. Reince Priebus Chairman of the Republican National Committee was quoted as saying ‘’Barack Obama has our country in a ditch and many of his lieutenants running for the senate are right there with him ‘’, he went on to say ‘’The punishment is going to be broad and its going to be serious’’.
So the people have spoken, the winner on the night was the U.S Dollar and the Pound. The loser on the night was the Australian Dollar but there is one person who could not be happier. That person is Glenn Stevens the Head of the Reserve Bank of Australia.
Glenn Stevens the head of the RBA spoke on Tuesday and focused on amongst other things the continued strength on the Australian Dollar. He stated ‘’even though the exchange rate had traded at lower levels recently, in large part reflecting the strengthening US Dollar , Aussie Dollar still remains above most estimates of its fundamental value .’’He went on to say ‘’it is offering less assistance than would normally be expected in achieving balanced growth in the economy.
A lower Dollar helps exporters as they usually get paid in foreign currency, then have to repatriate those back into the Dollar. The higher the currency they get paid in the more Australian Dollars they receive.
Across the Tasman New Zealand’s unemployment rate fell from 5.6% to 5.4% indicating the country is still on the right track and recent comments the boom that New Zealand was experiencing was over were a bit pre-emptive. The AUDNZD has now suffered 3 days of downward movement threatening upward trend line support