The Australian Dollar is currently trading 0.2% from a 2-week low before the Reserve Bank of Australia goes for a meeting on today. According to analysts, there is 62% chance that an interest rate cut will take place during the same. The major currency of Australia, Australian Dollar, also known as Aussie, declined against most of its major peers. The 2-year bond yield premium over the same in US experienced a decline to the lowest value since 1st November on last week. Aussie experienced decline against Yen as well after a report came out stating that the house prices rose less than what was forecasted, thereby missing estimates of most of the analysts.
According to the Senior Corporate Currency Dealer of Western Union Business Solutions, David Greene, if the Reserve Bank of Australia decides to cut the rate, a pretty big reaction is expected to be visible with Aussie, as everyone seems to be sitting on the fence at this point of time. Incidentally, Western Union Business Solutions is a part of the Global Payment Services Network. Greene added further that he does not think that the interest rate cut will be made by the Reserve Bank of Australia as the economy seems to be doing fine.
Aussie has tumbled by 0.2% and it is currently priced at $1.0238 from its yesterday’s value of $1.0254. Incidentally, at one point of time on yesterday, the currency touched $1.0222, matching the lowest figure since 23rd April. Against Yen, it has slid by 0.5% and is currently priced at 101.39 Yen. On the other hand, the major currency of New Zealand, the New Zealand Dollar or Kiwi was more or less unchanged at 85.17 US Cents. Against Yen, the currency experienced a decline of 0.3% and it is at 84.35 Yen at this time.
In 1st quarter, an index of house prices in Australia increased by 0.1%, while the analysts were expecting a gain of 1.8%. The figures were released by the Statistics Bureau. A separate report showed that Australia had a trade surplus of A$307 million in March, for the first time ever since December, 2011.
The Asia-Pacific Strategist of TD Securities Inc., Alvin Pontoh, stated that the rates are probably going to be kept at 3% and with this decision; Aussie is expected to bounce back as well.