Aussie slips ahead of Stevens’ speech

The Australian dollar has drifted lower versus the US dollar ahead of Glenn Stevens’ statement tonight.

Mr Stevens, governor of the Reserve Bank of Australia (RBA), is due to make an announcement at 10.30pm (London time), where it is expected that he will announce a wait-and-see attitude towards interest rate cuts. The RBA cut interest rates by 0.25% in both May and August in an effort to encourage economic growth, and the governor may deem it necessary to give the economy time to digest these record low interest rates rather than reducing them again.

The Australian dollar has been in decline for the past week due to dealers locking in profits from the recent rally, which began at the start of September. However, across the past eight weeks, the Australian dollar up 7.5% versus the US dollar.

Towards the end of last week we had some mixed news from China; the HSBC Chinese manufacturing report reached a seven-month high, while an increase in bad debts sparked fears that there are liquidity issues in the Chinese banking system. China’s recent booming economy has ensured a high demand for Australian minerals, but if Chinese demand starts to slip it could have a negative impact on the Australian economy.

Spot FX AUD/USD chart

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