The Australian dollar continues falling. After the the dovish rate statement sent the Aussie lower, the head of the central Bank, Glenn Stevens, sends the A$ to even new lows with his comments.
AUD/USD is currently trading at 0.9060 after already falling to a low of 0.9053: just 53 pips away from the round 0.90 target that is eyed by many. This is a new 34 month low for the pair, that just keeps on falling.
Aussie/dollar traded well under 0.92 but held on to 0.9135, which provided temporary support. Stevens sent it lower.
What did the RBA governor say?
He said he was surprised to see the forex market “take so long” to push the Aussie lower”. Similar to the rate statement, the central bank makes it clear it wants a weaker currency.
He also said that the down phase the investment boom poses challenges and Australian confidence is subdued.
But perhaps this more subtle hint was the key: “the board deliberated for a long time”. This could be interpreted as a sign that RBA seriously considered another cut. The statement that was published left an open door to more cuts, depending on inflation.
This last statement shows that a rat cut could come sooner than later.
The Aussie’s fall also comes on the background of a stronger dollar and a stronger yen: a risk on environment.
Clear support is at the round number of 0.90, which is eyed by many analysts. This is the “cautious target” by FX Concept’s John Taylor. His “bold target” is 0.60.
Below this round number, the next target is 0.8767, followed by 0.8567. These were important lines in 2010.
For more lines, events and analysis see the AUD/USD forecast.
Apart from the speech from Stevens, Australia released quite a few economic figures. Retail sales for May disappointed with a rise of 0.1%, weaker than 0.4% expected. This came on top of a downside revision for April: a drop of 0.1% instead of a rise of 0.2%.
Australia’s trade balance was positive: Australia still has a surplus, and it was better than expected: 0.67 billion instead of 0.05 expected.
In addition, the HIA New Home Sales rose by 1.6%, and the AIG Services Index rose from 40.6 to 41.5 points, still deep in contraction territory.
The next significant event is the the release of building approvals. The housing sector has a big impact.