The Australian dollar weakened against the other major currencies in the Asian session on Friday, as the extended sell-off in iron ore prices fueled speculation that the Reserve bank will announce further rate cuts.
Iron ore prices, which is Australia’s leading export commodity, extended its losing streak to a third session overnight. The falling iron ore prices may spur the Reserve Bank of Australia into additional policy easing. Last week, RBA Governor Stevens cut interest rates to 2.0 percent from 2.25 percent. Treasurer Joe Hockey also hinted at a rate cut at the budget presentation last week.
The minutes of the RBA’s May policy meeting suggested that another cut might be needed.
Thursday, the Australian dollar was trading higher against its major rivals, as disappointing U.S. retail sales data fueled speculation that the Federal Reserve may delay interest rate normalization further. The Australian dollar rose 0.48 percent against the U.S. dollar, 0.52 percent against the Yen, 0.87 percent against the Euro and 0.41 percent against the Canadian dollar on Thursday.
In the Asian trading today, the Australian dollar fell to a 1-week low of 1.4171 against the euro, from yesterday’s closing value of 1.4116. If the aussie extends its downtrend, it is likely to find support around the 1.43 area.
Against the U.S. dollar and the yen, the aussie dropped to 2-day lows of 0.8042 and 95.95 from yesterday’s closing quotes of 0.8075 and 96.25, respectively. The aussie may test support near 0.77 against the greenback and 92.60 against the yen.
The aussie edged down to 0.9647 against the Canadian dollar, from yesterday’s closing value of 0.9677. On the downside, 0.94 is seen as the next support level for the aussie.
Looking ahead, Japan consumer confidence index for April is due to be released, shortly.
In the European session, Swiss PPI for April and U.K. construction output for March are slated for release.
In the New York session, Canada manufacturing sales data for March, U.S. industrial production for April and U.S. Reuters/University of Michigan’s preliminary consumer sentiment index for May are due.
