Australian dollar below US85.00 cents

The Australian dollar has fallen through the US85.00 cent mark as strong US data and downbeat comments from the RBA weighed on the currency. At 9.33pm (AEDT) the currency was trading at US84.92 cents down from US85.29 cents yesterday.

Quarterly US GDP figures yesterday came in at 3.9% against Analysts expectations of 3.3% confirming that the American economy really is in recovery mode.

Comments from RBA deputy governor Philip Lowe confirmed the banks long standing position that the Aussie dollar still has further to fall and noted that “If the exchange rate is to play its important stabilizing role, it needs to go down when the terms of trade and investment are declining, just as it went up when the terms of trade and investment were rising. To date, as we expected, we have seen some adjustment, but if our assessment of the fundamentals is correct we would expect to see more in time”

He also mentioned that “our exchange rate is unusually high and, at the same time, savers are being offered unusually low returns. Of course, Australia is not unique in being in this position. And this particular configuration is causing complications for macroeconomic management here as well as in a number of other countries”

There is a raft of economic news due out of the US later today including the latest durable goods report and Initial jobless claims which may see the Aussie dollar come under further pressure.