The Australian dollar sunk to a fresh four year low overnight after strong GDP data from the US yesterday added more pressure on the US Federal reserve to lift Interest rates early next year.
At 7.30pm (AEDT) the Australian dollar was fetching US81.11 cents after reaching a new 4.5 year low of US80.87 cents yesterday.
US gross domestic product increased 5% between July and September, the Commerce Department said, coming in well ahead of analysts’ expectations of 4.3%.
“The picture out of the US just keeps getting better and better” noted analysts at Fibogroup forex brokers.
“With numbers like these the fed will have to act soon on rates which can only add to the woes of the Australian dollar”
A growing number of analysts are also predicting a rate cut in Australia next year as unemployment grows and Inflation slides which will reduce the Interest rate gap between the US and Australia and lessen the attractiveness of the carry trade.
Interest rates in Australia currently stand at 2.5% while in the US they stand at 0.25%.
Addressing concerns about a slowdown in China and the effects on the Australian dollar Lee Hardman, an economist at Bank of Tokyo-Mitsubishi UFJ in London noted,
"It's been a weak year for the Australian dollar, reflecting the slowing growth outlook for China, which has resulted in a further deterioration of Australia's terms of trade," Lee Hardman, an economist at Bank of Tokyo-Mitsubishi UFJ in London.
"We still think there's scope for further downside going forward."
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD continues its downward trend for the fourth consecutive day, driven by a stronger US Dollar influenced by the hawkish market sentiment surrounding the Federal Reserve and expectations of prolonged higher interest rates.
GBP/USD: The first downside target is seen at the 1.2600–1.2605 zone
GBP/USD trades on a weaker note around 1.2620 during the early European session on Friday. The decline of Pound Sterling is backed by the growing speculation that the Bank of England will begin the rate-cut cycle this year.
Gold ends Q1 2024 at record highs, what’s next?
Gold is sitting at an all-time high of $2,236, lacking a trading impetus amid holiday-thinned conditions on Good Friday. Most major world markets, including the United States are closed in observance of Holy Friday, leaving volatility around Gold price highly subdued.
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple price has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days.
US core PCE inflation set to ease in February on month as Federal Reserve rate cut bets for June mount
The core Personal Consumption Expenditures Price Index is set to rise 0.3% MoM and 2.8% YoY in February. The revised Summary of Projections showed that policymakers upwardly revised end-2024 core PCE forecast to 2.6% from 2.4%.