Australian dollar hits five-month lows as market locks in two rate cuts
The Australian dollar reached five-month lows on Wednesday, as investors factored in two interest rate cuts this year, with a chance of a third in 2020.
It comes after Reserve Bank of Australia Governer, Phillip Lowe indicated that a cut is likely imminent on Tuesday.
Australian dollar price
The Australian dollar huddled near five-month lows, pinned at at $0.6883, just above its recent rough of $0.6865, at time of writing.
Markets have priced in an almost certain rate cut by the Reserve Bank of Australia (RBA), predicting a 1.5% cash rate decision when its board meets on June 4,.
RBA Governor Philip Lowe’s speech on Tuesday prompted all four of Australia's major banks to tip a June move. According to Reuters data, futures imply a 93% probability of a cut next month, and are fully priced for 1% by November.
Australian government bond futures reached historic peaks. The three-year bond contract dipped 1 tick to 98.815, while the 10-year contract lost 2.5 ticks to 98.3300.
New Zealand dollar price
The New Zealand dollar fell to its lowest in 7 months, dropping to $0.6500, affected by the markets betting on a cut in rates from the RBA.
This put pressure on the Reserve Bank of New Zealand to ease again. It comes after the New Zealand central bank cut rates to a fresh record low of 1.5% earlier in the month.
Meanwhile, New Zealand's benchmark S&P/NZX 50 index rose 0.1% or 10.78 points to 10,226.87.
Utilities provider Infratil rose 6.4% while dairy giant a2 Milk Co Ltd shares edged higher.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.