The Australian dollar is trading around US87.17 cents at 5.20pm (AEDT) up from US87.07 cents yesterday as the Japanese government unexpectedly announced a second quarter contraction, technically pushing the country into recession. The economy contracted -1.6% year-on-year in the third quarter, against a consensus of 2.1% which sent the Yen reeling against most major currencies as fears grow the Japanese government may flood the country with economic stimulus.
Later today, the market will await the latest monetary policy speech from RBA governor Glen Stevens, following the latest minutes meeting from the bank. The tone of the speech will be closely monitored after recent comments by after RBA assistant governor Christopher Kent who said that intervention to cut the exchange rate was not off the table.
“We haven’t ruled it out,” Dr Kent noted.
“It’s still there as an option, if needed.” saying the dollar is “too high, relative to our fundamentals”.
In recent speeches, Governor Glen Stevens has mentioned “the Aussie dollar remains high by historical standards” and also made no secret that he would like to see the currency lower to give a much needed boost to the mining and export sectors which are feeling the pinch from the high dollar.
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