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TEHRAN, Feb 07 -The Australian dollar languished near a two-week low on Thursday on rising bets that interest rates would most likely come down this year amid heightened growth risks at home and abroad.
TEHRAN, Young Journalists Club (YJC) -Australia’s central bank on Wednesday opened the door to a possible rate cut as it acknowledged growing economic risks in a remarkable shift from its long-standing tightening bias that sent the Aussie dollar sliding.
The Aussie hovered near a more than one-week low at $0.7103, having lost 1.8 percent in the previous session, its largest percentage decline in more than a year.
“We have a clear trading range for the Aussie dollar. The shift in the RBA’s stance will likely make the Aussie test the $0.70 level versus the dollar,” added Michael McCarthy, chief markets strategist at CMC Markets.
The New Zealand dollar was down 0.3 percent at $0.6765, after easing 0.1 percent earlier following weaker-than-expected unemployment data on Thursday. On Wednesday, the kiwi tracked the Aussie dollar’s fall, losing 1.72 percent, its steepest percentage decline since Aug. 9, 2018.
The yen was 0.15 percent higher versus the greenback at 109.78. The dollar has gained around one percent versus the Japanese currency so far this month as global risk sentiment improved and led to a modest rally in global equities. Japanese demand for foreign bonds has been another reason for the strength in dollar/yen.
The dollar index, a gauge of its value versus six major peers was steady at 96.35, hovering close to its two-week high.
The dollar index has gained for three consecutive sessions, mainly due to a weaker euro, which constitutes around 58 percent of the index.
The single currency was flat at $1.1364, having lost 0.45 percent of its value on Wednesday. The euro has lost around 1.3 percent over the last week as investors bet the European Central Bank will keep monetary policy accommodative on weaker-than-expected growth and low inflation in the common area.
Elsewhere, sterling was marginally lower at $1.2927. The British pound has weakened by 1.3 percent in February due to Brexit woes.
The United Kingdom is on course to leave the European Union on March 29 without a deal unless British Prime Minister Theresa May can convince the bloc to reopen the divorce agreement she reached in November and then sell it to sceptical British lawmakers.
The Bank of England is scheduled to meet later on Thursday and is widely expected to keep interest rates unchanged.
“The BoE won’t even consider changing interest rates until the terms to leaving the EU become clear,” said Kathy Lien, managing director of currency strategy at BK Asset Management.
Source: Reuters
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