By TraderVox.com
Tradervox (Dublin) – Consumer price inflation report from Australia showed that inflation slowed in the first quarter of the year hence providing the RBA with the scope to make the anticipated rate cuts. The report pushed the Australian currency down against most currencies in the market.
Traders have increased their bets on Reserve Bank of Australia reducing the interest rate from the current 4.25 percent expected to be done during its next meeting in May. The report adds pressure to the already weakening Aussie as market searches for save haven assets.
According to Mitul Kotecha, the RBA will most probably make a rate cut of 25 basis points. The sentiments are shared by most analysts in the market who expect a first cut in May and another in June. The sentiments of lowering the interest rate were also shared by the RBA officials who have indicated that RBA would be willing to cut interest rate if the situation called for it.
The Australian dollar has decreased against most of its peers as traders placed bets on RBA rate cuts. The Aussie dropped by 0.5 percent against the dollar to exchange at $1.0270 in Sydney where it had fallen to $1.0247 which is the weakest it has been since April 11. The Australian Dollar was down 0.7 percent against the yen to exchange at 83.16 yen. Its south pacific counterpart, the Kiwi, declined by 0.1 percent against the US dollar to trade at 81.30 US cents; it had weakened by 0.6 percent yesterday. Against the yen, the New Zealand dollar declined by 0.3 percent to trade at 65.74 yen.
Some analysts are claiming that the Australian dollar is vulnerable, and it might find strong support at $1.0225 -$1.0260. If it breaks downward past this level, then this would open doors for 1.0125. Reports from US and Canada might marginally affect the Australian dollar only increasing marginally if they are worse the market expectation.
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