Australian dollar near multi-month USD low
The Australian dollar is hovering near multi-month lows as traders wager the local cash rate will stay at a record low for some time yet compared to the steady pace of tightening by the US Federal Reserve.
The Australian dollar held at 73.76 US cents, within spitting distance of a 1-1/2 year trough of 73.11 touched earlier this month.
The loss came as longer-dated Treasury yields jumped on bets the Fed will stay on its tightening path despite US President Donald Trump bemoaning an appreciating currency.
The US dollar index, which measures the greenback against a basket of major currencies, has strengthened 2.7 per cent so far this year compared to a near 10 per cent drop in 2017.
The disparity in policy outlook between the United States and other major economies has been the primary driver of a buoyant dollar this year.
"We have a bearish view on the Aussie," said Steven Dooley, currency strategist at Western Union Business Solutions.
"In an environment where the Fed is raising rates and the RBA is on hold, based on market expectations at least until 2020, our year-end target for the Aussie is 72.00."
Dooley sees critical chart support at 73.20, tipping a break below to possibly see the Aussie easing to 71.50.
Investors will next turn their attention to Australia's consumer price data due on Wednesday.
Economists polled by Reuters expect core inflation, a measure closely watched by policymakers, will continue to undershoot the central bank's 2-3 per cent target band in the second-quarter.
Lukewarm consumer prices is a major reason the Reserve Bank of Australia has kept rates at a record low 1.50 per cent for nearly two years now.
Interbank futures do not fully price in a hike until the end of next year.
Worries about a further escalation in the Sino-US trade war have also weighed on antipodean currencies which are often played as a liquid proxy for Chinese assets.
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