Australian Dollar

The Australian dollar (Currency:AUD) is broadly firmer across the global FX space today.

The pound Australian dollar currency pairing is 0.2 pct down on yesterday's close at 1.5607. The Australian dollar US dollar pair is 0.25 pct higher at 0.9985. (Latest FX forecasts are published on our IMT site - free access via this Facebook entry path).


RBA Governor Stevens repeated his long standing view that consumers benefit from a strong Australian dollar, adding that one should not wish for AUD to fall too quickly given that it helps to suppress import prices.

He conceded though that the real exchange rate is “pretty high here”. Australian consumer sentiment finally stabilised in June after the 25 bps RBA rate cut.

"Our economists still see room for another 25 bp of easing to come through in August," says Gareth Berry at UBS.

Elsewhere, New Zealand Finance Minister English noted that the RBNZ has room to move on rates if the GDP outlook darkens.

The UBS New Zealand economist however does not expect a cut at Thursday’s policy decision, and only 3 bp of easing is priced in.

"It is likely however that the RBNZ will revise down growth and inflation forecasts, implying that even more patience can be shown before the tightening cycle eventually begins," says Berry.

Over in Canada, Bank of Canada Governor Carney said that the escalation of the Eurozone crisis and the deterioration in financial markets prompted the bank to “change the tone a bit” in its June 5 policy statement.

"We note that, like the April 17 statement that preceded it, the bank stuck to its key guidance that, 'some modest withdrawal of the present considerable monetary policy stimulus may become appropriate,'" says Berry.

However, some qualification of this forward guidance was also introduced - making it conditional on a continuation of the current economic expansion and a continued absorption of excess supply.

Asked if the policy rate would be hiked before year-end, Carney said it would depend on the evolution of both global and domestic factors.

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