The Australian dollar is on the slide, falling to a new low of 0.8530 – the lowest since 2010. It is trading under levels of 0.8540 seen earlier in the month.
The drop comes on the background of Philip Lowe’s speech in Sydney. The deputy of the Reserve Bank of Australia says that a lower Australian dollar is helpful and sees a further drop over time. This is not the first time that the RBA is talking down the Aussie. Their words have a stronger impact when they come on the background of an already sliding currency.
Perhaps an even more important statement is that concerns over high wage costs in Australia are actually concerns about the Australian dollar.
More comments: resource exports are 12% of Australian GDP and could rise, and the Australian economy has challenges ahead. On the optimistic side, Lowe says there are reasons to remain confident on the economy thanks to population growth, resource and Asian ties.
Last week, China surprised with a rate cut and this temporarily helped the Aussie escape the lows. This time Lowe’s speech caught AUD/USD at a low point.
The low so far is 0.8530, and the pair is bouncing back only marginally. The round number of 0.85 provides support. There are a few more levels before the 0.8066 number which is the next critical multi-year support line. Resistance awaits at 0.86 and 0.8660.
What’s next for the Aussie dollar? Here is a bearish opinion: Staying Short AUD/USD: Bearish We Stand; – Morgan Stanley.
And the 30 minute chart that shows the dip is below: