Australian Dollar Advances After RBA Governor Lowe's Speech
22 September 2016 - 6:26AM
RTTF2
The Australian dollar climbed against its most major
counterparts in early European deals on Thursday, after the Reserve
Bank of Australia Governor Philip Lowe sounded upbeat on the
economy and reiterated that low interest rates are "not
particularly useful" to help lift growth.
In his first appearance before the parliamentary committee as
central bank governor, Lowe said that although inflation is
expected to remain low for some time, it would gradually pick up in
the light of strengthening labour market conditions.
"I believe we have reached the bottom of the interest rate
cutting cycle because we are seeing signs of stabilisation in
wages," he added.
"We have not seen our job as always keeping inflation tightly in
a narrow range," he told the House of Representatives Standing
Committee on Economics.
Although extraordinary actions taken by some central bank are
not intended to influence exchange rates, they have, inevitably
affected international capital flows and currency rates, Lowe
observed.
Due to such actions, foreign investors found Australian assets
attractive and influence the economy, he said.
The currency was also underpinned by higher commodities, buoyed
by a weaker dollar after the Fed decision to keep interest rates
unchanged and hinting at delaying interest rate rise till the end
of the year.
The currency has been trading higher against its major rivals,
except the U.S. dollar, in the Asian session.
The aussie strengthened to a 2-week high of 0.7666 against the
greenback, compared to Wednesday's closing value of 0.7621. The
aussie is likely to find resistance around the 0.79 mark.
The aussie climbed to 1.0437 against the NZ dollar, a level
unseen since August 30. The next possible resistance for the
aussie-kiwi pair is seen around the 1.055 region.
Reversing from an early low of 76.28 against the Japanese yen,
the aussie bounced off to 77.03. Continuation of the aussie's
uptrend may see it challenging resistance around the 78.00
level.
The aussie spiked up to a 2-week high of 1.4632 against the
European currency early in the Asian session and held steady
thereafter. The pair was worth 1.4670 when it finished Wednesday's
trading.
On the flip side, the aussie eased back to 0.9972 against the
loonie, around where it finished yesterday's trading.
Looking ahead, U.S. weekly jobless claims for the week ended
September 17, U.S. existing homes sales data for August, U.S. FHFA
house price index for July, U.S. leading indicators for August as
well as Eurozone consumer confidence index for September are slated
for release in the New York session.
At 9:00 am ET, European Central Bank President Mario Draghi,
Vice Presidents Valdis Dombrovskis and Vitor Constancio are
expected to speak at the European Systemic Risk Board annual
conference in Frankfurt.
At 9:30 am ET, Bank of England Deputy Governor Jon Cunliffe is
expected to participate in a panel discussion at the European
Systemic Risk Board in Frankfurt.
At 1:00 pm ET, Bank of England Governor Mark Carney will deliver
a presentation titled "Arthur Burns memorial lecture," in Berlin.
At the same time, BOE MPC Member Kristin Forbes will deliver a
speech at Imperial College in London.
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