Australian Dollar Struggles Amid US Dollar Strength

Strategic Insights -

The Australian dollar has opened almost unchanged, following a recent dip to its lowest level in over a year. The currency continues to be affected by the strong US dollar, fueled by expectations of continued interest rate hikes in the US. National Australia Bank's Michael Jansen notes that the Australian dollar is struggling due to the robust US economy and the resulting strong medium-term support for the US dollar. Meanwhile, CMC Markets' David Land points to the Reserve Bank of Australia's moderate outlook for inflation and interest rates, suggesting that rates may remain unchanged in the near future.

Key Takeaways:

  • The Australian dollar has reached its lowest level in over a year, trading at $US0.7335/39.
  • The currency is struggling due to the strong US dollar, driven by expectations of continued interest rate hikes.
  • National Australia Bank's Michael Jansen expects the Australian dollar to pause around .7300 before making another move lower.
  • CMC Markets' David Land notes that the Reserve Bank of Australia's moderate outlook for inflation and interest rates may mean that rates remain unchanged in the near future.
  • The Australian economy is experiencing tepid growth, with a domestic economy slowdown and little chance of a rate hike in the near future, making it a "hardly bullish environment for the Aussie."
  • The RBA's trade-weighted index (TWI) shows the Australian dollar at 63.2 points, up from Monday's close of 63.1 points.

Statistics:

  • The Australian dollar has traded at its lowest level since October 20, 2004.
  • The US dollar has shown significant strength, with expectations of continued interest rate hikes.
  • The Reserve Bank of Australia's TWI has increased to 63.2 points, up from Monday's close of 63.1 points.
  • The Australian dollar is trading at $US0.7335/39, fractionally above Monday's close of 0.7331/34.

Sources:

  • Asia Pulse - Sydney, Nov 8
  • Michael Jansen, National Australia Bank
  • David Land, CMC Markets
  • Reserve Bank of Australia