Australian dollar plunges as rate cut bets rise, commodity prices sink
The Australian dollar plunged again overnight, as falling commodity prices dragged it to a fresh five-and-a-half-year low.
The local currency fell as low as 77.17 US cents, as a combination of strong US data boosting the greenback and falling commodity prices hurting resources exporters, before bouncing back to 77.85 by 10:30am (AEDT).
The Aussie dollar has now lost the best part of 3 cents against the greenback over the past couple of days, after having rallied on Wednesday afternoon due to higher-than-expected Australian inflation figures.
While US dollar strength has played its part, the Commonwealth Bank’s chief currency and rate strategist Richard Grace told ABC News Online that price slides for copper and other metals weighed more.
“All the commodity currencies fell last night – that is the New Zealand dollar, Canadian dollar, Australian dollar – so they fell much more than the European currencies.”
The other major factor behind the Aussie dollar’s rapid decline has been an article from Herald Sun economics columnist Terry McCrann saying that a Reserve Bank rate cut next week is all but certain.
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