The Australian dollar weakened against the other major currencies in the Asian session on Monday after Reserve Bank of Australia Deputy Governor Philip Lowe said the central bank is likely to lower its interest rates again in the August meeting.
Speaking to the Corporate Finance Forum in Sydney, Lowe said that there is still scope to lower interest rates further. However, some economists expect the possibility of a further rate cut lower than a record low of 2 percent in the next August meeting.
“We still have scope to lower interest rates if we need to. That doesn’t mean we’re going to, but we have scope to do that,” he said.
He also added that there is scope for a further depreciation of the Australian dollar that would be helpful in the transition of the Australian economy. There are also scope for lower exchange rate if needed, he said.
In other economic news, data from the Australian Bureau of Statistics showed that the total number of new motor vehicle sales in Australia was down a seasonally adjusted 1.5 percent on month in April, standing at 94,888. That was down from the 0.5 percent increase in March
Friday, the Australian dollar fell against its major rivals, as the extended sell-off in iron ore prices fueled speculation that the Reserve bank will announce further rate cuts. The Australian dollar fell 0.55 percent against the U.S. dollar, 0.41 percent against the Yen, 0.81 percent against the euro and 0.35 percent against the Canadian dollar.
In the Asian trading today, the Australian dollar fell to a 10-day low of 1.4276 against the euro and a 5-day low of 95.64 against the yen, from Friday’s closing quotes of 1.4235 and 95.85, respectively. If the aussie extends its downtrend, it is likely to find support around 1.45 against the euro and 92.50 against the yen.
Against the U.S. dollar and the Canadian dollars, the aussie dropped to 0.8004 and 0.9631 from last week’s closing quotes of 0.8030 and 0.9643, respectively. On the downside, 0.77 against the greenback and 0.93 against the loonie are seen as the next support levels for the aussie.
Looking ahead, Swiss retail sales data for March is slated for release in the European session.
In the New York session, U.S. NAHB housing market index for May is set to be published.
The material has been provided by InstaForex Company – www.instaforex.com