AUD/USD Dives Below $0.9000 as RBA Suggests it Prefers $0.8500
- RBA Governor Stevens comments on Australian Dollar, Fed’s QE3 taper.
- ‘Hopes Fed reduces asset purchases before too much longer.’
- States that AUDUSD near $0.8500 is needed for the Australian economy.
The Australian Dollar took an unexpected spill this morning after Reserve Bank of Australia Governor Glenn Stevens surprised markets with overly dovish commentary. Noting that the economy won't likely be influenced by further rate cuts, Governor Stevens suggested that the economy would fare better if the AUDUSD traded closer to $0.8500.
This speech marks the continuation of a regime change at the RBA. Instead of using conventional monetary policy to help the economy (changes in interest rates), it may now be more directly attempting to undermine the exchange rate. This would be a more serious dovish development if achieving an AUDUSD exchange rate of $0.8500 is a serious goal for Governor Stevens.
AUDUSD 1-minute Chart: December 12, 2013 Intraday
Charts Created using Marketscope – prepared by Christopher Vecchio
At the time of this speech, the AUDUSD traded at 0.9057, and had fallen to as low as 0.8960.At the time this report was written, it was trading at 0.8980.
--- Written by Christopher Vecchio, Currency Analyst
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