The Australian dollar dropped yesterday after poor employment data. Today, the currency maintained losses as the central bank policy statement came out rather dovish and confirmed possibility of an interest rate cut.
Australian employment grew by just 1,100 in October from September, while much bigger growth by 10,300 was expected by experts. The unemployment rate was at 5.7 percent.
The Reserve Bank of Australia released its monetary policy statement today. The central bank showed that it would like the exchange rate to drop:
A lower exchange rate is likely to be needed to achieve balanced growth in the economy. A lower exchange rate, if it came about, would also see growth strengthening sooner than forecast and place some upward pressure on inflation for a time.
The bank also explained that even more accommodative policy cannot be ruled out:
At the meetings since August, the Board judged that given the substantial degree of monetary policy stimulus that had already been put in place, it was appropriate to hold the cash rate steady, but not to close off the possibility of reducing it further, should that be needed to support economic activity consistent with the inflation target.
AUD/USD was down from 0.9525 to 0.9455 yesterday and traded near this level as of 1:43 GMT today. AUD/JPY declined from 93.96 to 92.73 before trading at 92.82. EUR/AUD was almost flat at 1.4186.
If you have any questions, comments or opinions regarding the Australian Dollar,
feel free to post them using the commentary form below.