The Australian dollar finally surrendered to pressure and fell below 80 cents to the US dollar. After giving a fight and enjoying strong employment data at home as well as the upbeat Chinese GDP, it could not withstand the latest wave of greenback strength that came on the back of the big easing decision from the ECB.
AUD/USD went as low as 0.7963 before bouncing but so far without regaining the 0.80 level.
The ECB announced a huge QE program potentially worth over 1 trillion euros. Mario Draghi exceeded expectations. What does the euro-zone have to do with Australia? There is a growing sense that other central banks will follow.
But it is not only the European Central : the Bank of Canada surprised and cut interest rates from 1% to 0.75% and the RBA could follow: the interest rate in Australia stands at 2.50%. Glenn Stevens and his colleagues at the Australian central bank meet on February 4th and a rate cut certainly a possibility.
In addition to the central bank race to the bottom, we had a fresh read from HSBC regarding the state of Chinese manufacturing: the economic giant which is Australia’s No. 1 trade partner is not able to post growth figures in the purchasing managers’ indicator: a score of 49.8 was seen in the preliminary release for January, below the 50 point mark separating growth and contraction.
For more, see the AUDUSD prediction.
AUD/USD is at the lowest since 2009. And this is how it looks on the chart:
Share
