The Australian Dollar is stuck in a downtrend and on one level at least it’s quite difficult to see why.
After all, it’s just emerged from a week in which the domestic numberswere pretty good across the economic board. Timely indexes covering manufacturing, services and construction all attested to health.
What’s more its central bank may not have completely ruled out lower interest rates (what central bank ever does?), but it has certainly struck a pose which makes them extremely unlikely. Reserve Bank of Australia Governor Philip Lowe reminded markets that current, record-low rates won’t be around forever.
And the RBA’s monetary policy statement said that recent economic data had provided it with some “assurance about the domestic outlook.” A central bank prepared to declare itself “assured” is a rare beast indeed.
So why is the Aussie struggling? Well, of course interest-rate differentials don’t help. Markets may be all-but convinced that the next move in Aussie rates will be a rise. But they’re just as certain that it won’t be soon, certainly not this year, maybe not until well into next.