The Australian dollar pushed higher in overnight trade on the back of a weak US dollar but has since retreated breaking back down through the US74.00c mark to trade at around US 73.70c
After reaching, a high of US74.39c the Aussie dollar succumbed to selling pressure as the news of lower than expected Yearly CPI numbers, which came in at 1.7% against analysts’ expectations of 1.9%. There are now fears that the Australian economy is heading in the footsteps of the Canadian economy and that another interest rate cut is inevitable.
In fact, in the latest minutes meeting from the RBA governor Glen Stevens noted that further interest rates cuts were not off the table and the central bank will wait and see how the situation turns out.
As we wrote yesterday, the Australian dollar has found strong resistance at around the US73.85c level and is now trading well below this mark.
The currency will keep trying to make a run for this level and may even temporarily break it but we believe the bears will win the struggle and the Australian dollar will continue on its way down to a new 6 year low.