The Australian dollar weakened against the other major currencies in the Asian session on Friday after the release of Reserve Bank of Australia’s statement on monetary policy showing that Australia’s exchange rate depreciated by around 5 percent in trade-weighted terms but remains high by historical standards.
The bank noted that the aussie is above the level seen earlier in the year despite the sizeable declines in key commodity prices over the course of this year.
“A gradual strengthening of economic growth should, in time, lead to stronger growth of employment. However, in the near term, with growth in economic activity forecast to remain below trend, the unemployment rate is likely to stay elevated,” the bank said.
Policymakers said that the very accommodative monetary policy should provide support to demand and help growth to strengthen over time. Inflation is expected to be consistent with the 2-3 percent target over the next two years.
The RBA has kept its benchmark interest rate unchanged at the record low 2.50 percent since August 2013, when the bank had lowered the cash rate by 0.25 percent.
In other economic news, data from the Australian Industry Group, or AiG, showed that Australia’s construction sector continued to expand in October, though at a slower rate. The AiG performance of construction index fell to 53.4 in October from the nine-year high of 59.1 in September.
In the New York session overnight, the Australian dollar was slightly higher against the other major currencies. Nevertheless, the Australian dollar fell 0.43 percent against the U.S. dollar, 0.05 percent against the yen, 0.20 percent against the euro and 0.06 percent against the Canadian dollar on Thursday.
The Australian dollar fell to a 4-year low of 0.8546 against the U.S. dollar in Asian trading, down from yesterday’s closing quote of 0.8555. If the aussie extends its downtrend, it is likely to find support around the 0.80 area.
Against the yen, the euro, the Canadian dollar and the NZ dollar, the aussie edged down to 95.48, 1.4480, 0.9766 and 1.1118, respectively. The aussie is likely to find support around 96.20 against the yen, 1.46 against the euro, 0.96 against the loonie and 1.09 against the kiwi.
Looking ahead, German industrial production, trade balance and current account data, all for September are due at 2:00 am ET.
In the New York session session, Canadian and U.S. jobs data for October and U.S. Consumer credit data for September are due to be released.
At 10:15 am ET, Federal Reserve Chair Janet Yellen will participate in a panel discussion titled “Policy Since the Onset of the Financial Crisis” at the Bank of France’s Symposium “Central Banking: The Way Forward?,” in Paris.
At 2:30 pm ET, Federal Reserve Governor Daniel Tarullo will deliver a speech on community banking in Chicago.
The material has been provided by InstaForex Company – www.instaforex.com