The Australian Dollar has received a beating this week and it doesn’t look like the kicking will end anytime soon, in fact the currency’s decline is expected to continue for a few weeks as investors sell the Oceanic currency.
The reason for the currency’s fall is a combination of global investors anticipating the start of the US Federal Reserve’s reduction of economic stimulus before the end of the year, a weakening China and the slowdown in the Australian economy as the mining boom comes to an end.
The currency fell to as low as 91.64 US cents overnight, almost four cents lower than its value just before the US Federal Reserve signalled a possible end to its $US85 billion a month stimulus program to support the US economy. It managed to recoup some of its losses but the downward trend is likely to resume.
Shane Oliver, chief economist at AMP Capital believes that further falls for the Australian Dollar are inevitable.
“With commodity prices in a downtrend and the outlook for the Australian economy deteriorating relative to the US, it’s likely the currency is ultimately heading lower. The recent turbulence in markets may have further to go as uncertainty about the Fed and China will take a while to dissipate. Continued strength in the US Dollar as the Fed tapers quantitative easing should keep downward pressure on the Australian Dollar” Oliver said.
Next week will be relatively quiet on the domestic data front but the major issue of uncertainty could be the potential challenge to Australian Prime Minister Julia Gillard. As her popularity falls speculation is rising that her Labour Party will choose a new leader ahead of September’s elections.
Further declines in the value of commodities such as Iron ore will also weigh upon the Australian Dollar.
Current Australian Dollar (AUD) Exchange Rates
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The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9243 >
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6995 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5970
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4395
The New Zealand Dollar/Australian Dollar Exchange Rate is currently in the region of: 0.8416 <
Correct as of 10:30 am GMT
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