By TraderVox.com
Tradervox.com (Dublin) – The Australian dollar dropped against the dollar to its weakest level in over six weeks before the Reserve Bank of Australia announced its decision yesterday. The Aussie and Kiwi dropped amid speculation of global economic slowdown, which is expected to be signaled by the data expected today from the euro region. Last week, the south pacific dollars declined against safe haven currencies like the yen after China released less-than-expected manufacturing data. Sign of global economic slowdown are boosting the demand for safety in the market which is not good for the south pacific dollars.
Despite the Reserve Bank of Australia refraining from cutting the interest rates, the Australian dollar decreased against most of its 16 major counterparts. A Retail Sales report from the euro zone is expected to show a decline while services in the region are expected to contract, adding more pressure on commodity related currencies. The New Zealand dollar depreciated to more than five-week low against the US dollar as Asian stocks declined. Hans Kunnen, the Chief Economist in Sydney at St. George Bank Ltd, said that the Aussie decline yesterday was as a result of speculation that the RBA was not going to make any unpredicted move in reference to rates. He also predicted that the RBA might make a rate cut before Christmas this year.
The Australian dollar also dropped as a report from Bureau of Statistics showed that the south pacific nation registered a narrower current account deficit from A$13billion in the first quarter to A$11billion in the second quarter. The Aussie has also dropped by 4.2 percent in August, making it the worst performer against the 10 most traded currencies. The New Zealand dollar posted the second worst performance, declining by 3.6 percent in the same month.
The Aussie touched its lowest since July 25 of $1.0224 yesterday, but gained against the yen by 0.2 percent to trade at 80.91 yen. It had earlier declined to 80.07 yen, the weakest since July 25. The New Zealand currency dropped to its July 26 low of 79.56 US cents before advancing a bit to 79.81. It traded at 62.53 against the yen from 62.42.
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