Australian dollar slips
Yesterday, the local currency has edged higher as speculation about a slower pace of rate hikes from the Federal Reserve dragged on its US counterpart.
The Aussie inched ahead to 73.68 US cents on Tuesday and back toward Monday’s four-month peak at 73.94 US cents. Dealers reported stiff resistance above 73.80 US cents which was proving tough to break.
The Reserve Bank of Australia held its rates at 1.5 per cent at its monthly policy meeting, as widely expected, but remained upbeat on the economy in a sign the next move was still likely to be higher.
“The Australian economy is performing well,” said RBA Governor Philip Lowe.
“With the economy expected to continue to grow above trend, a further reduction in the unemployment rate is likely.”
Data on Tuesday showed the country’s current account deficit narrowed to $10.7 billion in the third quarter thanks to rising export receipts particularly for liquefied natural gas.
Net export volumes added 0.4 percentage points to gross domestic product, twice what analysts expected.
Government spending also added to growth in the quarter with a large pipeline of infrastructure projects planned.
The GDP report is due on Wednesday and analysts forecast growth around 0.6 per cent for the third quarter and a brisk 3.3 per cent for the year.
“We expect the annual GDP growth to sit at an above trend 3.25 per cent over the next few years,” said CBA economist Kristina Clifton. “There is plenty of public infrastructure spending still to come and non-mining business investment looks set to post another increase in 2018/19.”
“However there are downside risks to household consumption because falling dwelling prices may trigger negative wealth effects.”