Australian dollar hits near-6 month low against Singdollar

Australian dollar hits near-6 month low against Singdollar

Australian dollar notes of various denominations, seen on display on February 22, 2004
File photo of Australian dollars. (Photo: AFP)

SINGAPORE: The Australian dollar on Friday (Jun 14) hit a near-six month low against the Singapore dollar as investors bet on interest rate cuts by Australia's central bank following soft domestic economic data.

The Australian currency fell to 0.9423 against the Singdollar, the lowest since it touched 0.9264 against its Singapore counterpart on Jan 3 this year, according to global financial portal investing.com.

Year-to-date, the Australian dollar has slipped 1.82 per cent against the Singdollar, according to Bloomberg.

The Aussie dollar slipped as investors bet that aggressive rate cuts would be needed to support the economy in the wake of soft domestic data and the fallout from the US-China trade standoff.

"The perception of an Aussie rate cut is gaining steam," said Bart Wakabayashi, Tokyo branch manager at State Street Bank.

Bond futures imply a 66 per cent probability the Reserve Bank of Australia will follow up its recent quarter-point easing with another in July. If not, a reduction to 1 per cent is considered certain by August.

"Rising interest rate cut expectations thanks to weak data has fuelled weakness in the Australian dollar with trade tensions also weighing on demand," said Manuel Oliveri, an FX strategist at Credit Agricole in London.

Meanwhile, UOB analysts in a report on Friday added that the weakness in the Australian dollar "has been more resilient than expected" and that a further decline "would not be surprising".

"The price action suggests AUD has moved into a ‘negative phase’ and from here, a break of the next support at 0.9400 would not be surprising in the days ahead," UOB said in the report reflecting its view for the next one to three weeks.

Australia's employment rate stayed stuck at 5.2 per cent in May, it was announced earlier this week, as a surge in part-time hiring was met by an ever-expanding pool of labour.

The country's central bank had already cut rates for the first time in three years on Jun 4.

The Reserve Bank of Australia cut rates by 25 basis points to a historic low of 1.25 per cent as the economy grappled with low wages, a housing slump and below-target inflation.

Source: CNA/agencies/nc(aj)

Bookmark