Finport Currency Brief - Courtesy of Compass Global Markets.
The Australian Dollar posted a near 2% fall last week as data that showed weaker wages growth, a lower number of new jobs and a fall in commodity prices outweighed a drop in the unemployment rate to just 5.4%. If it were not for the concerns over the US tax reforms then the local currencies sell-off could well have been a lot greater.
Another factor weighing on our currency is the shrinking gap in interest rates offered between US and Australian Government debt, that sits at 17 year lows and seems likely to tighten further.
On that note and looking ahead to events this week, we have the release of the Reserve Bank's Monetary Policy tomorrow morning and a speech by Governor Lowe in the evening. This is followed by a speech by US Fed Chairwoman Yellen on Wednesday and then Thursday's release of the US Fed's minutes from their last meeting.
For all intents and purposes then, we appear set for another leg lower over the next day or two, as the initial technical support level on the chart broke and we set sail towards the lower end of the the 2 year old upward channel - another 1% below.
Exporters now have their target level at which to repatriate foreign currency back into A$, whilst importers may want to clear near term invoices asap.
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