Aussie Dollar Tumbles on CPI News

With the likelihood of an interest rate hike from the Reserve Bank of Australia waning following the earlier release of data which showed consumer inflation at 0.6% in the last quarter, at a rate below analysts’ consensus, the Australian Dollar edged significantly lower against its U.S. counterpart. Also weighing on the Aussie Dollar though to a lesser extent was the release of the Chinese HSBC preliminary PMI reading, which showed April edging higher to 48.3 from March’s 48.0 reading; however though largely expected, analysts point out that the figure still remains firmly in contractionary territory.

As reported at 1:20 p.m. (JST) in Tokyo, the AUD/USD dropped 0.9% to trade at $0.9286, moving well off the 5-month peak struck earlier this month when the pair hit $0.9461. Analysts say that caution is prudent and that the Aussie could see more downside risks in the short term which will likely give rise to an influx of buyers, especially given the RBA’s relatively high rates of interest. Meanwhile, the EUR/USD pair traded at $1.3817, a gain of 0.1% for the Euro, while the USD/JPY slipped to 102.55 Yen, a loss of 0.1%.

Draghi Speech Eyed for Direction

In continued light trading, however, most major currency pairs were subdued with the main pair, the EUR/USD, narrowing and range bound. Markets are still wary of the ECB’s intentions regarding stimulus and will await Draghi’s speech on Thursday to provide additional clarity.

Barbara Zigah

After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.