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Aussie drops to 45-day lows against US dollar

The Aussie dollar sank by 0.83% to US$0.7043 at around 8.00am GMT and had fallen to a low of US$0.7027 moments earlier, the lowest since March 11 this year.

The Australian dollar sank to 45-day lows against the greenback on Wednesday, in a response to the weaker-than-expected inflation numbers released today and a bullish rally for the United States (US) dollar on strong US earnings results and positive new home sales data.

The Aussie dollar slumped by 0.83% to US$0.7043 at around 8.00am GMT and had fallen to a low of US$0.7027 moments earlier, the lowest since March 11 this year, IG data showed. Trading view from IG’s client sentiment was bearish, with 28% of the clients shorting the currency, additional information from DailyFX revealed.

Australia’ consumer price index stalled to a 1.3% increase in the first quarter of this year, following the 1.8% gain in the previous quarter, the lowest reading since September quarter of 2016.

The soft outcome for the start of the year prompts the possibility of an interest rate cut this year. The last time inflation was lacklustre, the Reserve Bank of Australia had responded by two rate cuts in 2016 - one in May and the other in August.

Upbeat US earnings, new home sales

Meanwhile, Wall Street’s S&P 500 and Nasdaq ended Tuesday’s session at record highs after solid earnings. The Dow Jones Industrial Average also rose by 0.55% to 26,656.39 at the close.

Broad-based S&P 500 ended the day’s trading 0.88% higher at 2,933.68, three points above its previous record in September while tech-rich Nasdaq Composite Index climbed 1.32% higher to 8,120.82.

Upbeat earnings results for Tuesday included Coca-Cola, which reported a revenue of US$8.02 billion for the first quarter, topping the US$7.88 billion expected. Earnings from continuing operations came in at 48 US cents per share, beating Wall Street’s estimates of 46 US cents per share.

Yesterday, economic data from the US showed sales of new US homes unexpectedly rising in March, ascending to a 16-month high and on a third-consecutive month of increase, supported by lower borrowing costs. Single-family home sales rose by 4.5%, topping estimates in a Bloomberg poll.

This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. Any research provided should be considered as promotional and was prepared in accordance with CFTC 1.71 and designed to promote the independence of investment research. See our Summary Conflicts Policy, available on our website.

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