AUD/USD – Downbeat RBA comments fuel aussie slump

on Jul 30, 2013

**, Tuesday 30 July:** Reserve Bank of Australia governor Glenn Stevens signalled earlier today that some strengthening of consumption could reasonably be expected from recent growth rates but that “we should not expect a return to the sorts of growth seen in the 1995-2007 period”. Speaking just a week before the RBA’s next policy meeting, Stevens said that the subdued inflation outlook afforded some scope for further monetary easing if deemed necessary to support domestic demand. On the strength of such words, pundits have been putting an 80 percent probability on the prospects of an interest rate cut at the August 6 meeting.

Currency markets have already been on high alert since the 6.9 per cent slump in June building approvals sank hopes for now that the housing sector would fill the void left by decelerating mining investment. Governor Stevens’ downbeat comments contributed to a fall in the AUD, down to a 2-week low and just 66 pips north of a yearly low.
Australian dollar seasonality also favours the downtrend, with the fortnight from the end of July to the middle of August typically having been the worst period for the aussie.

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