Dollar Report – G20 causes Aussie to weaken

The Aussie Dollar fell slightly over the past week after disappointing news from the G20 Summit this weekend. This combined with announcements from the reserve bank earlier in the week, means that the Aussie has come to rest a little lower than was previously expected. The Aussie was seen to rest at 1.037 to the US dollar and 0.646 to the British Pound early Monday morning.

The weakening of the Aussie stems from news that the Reserve Bank ofAustraliahas lowered their predictions for economic growth and inflation for the forthcoming quarter. The Reserve bank was cited saying that “economic forecasts have continued to be tilted to the down side” This has spurred speculation of another interest rate cut hot on the heels of Tuesdays rate cut. Tuesday’s rate cut is the first we have seen in almost two years.

The G20 Summit this weekend has resulted in a weakening of the Aussie. It was agreed that a new National Unity Government will be formed inGreeceto work to secure international financing. It is believed that this will avert a National Default forGreece. Stephen Roberts chief economist at Nomura has said that “decision to form a new Government inGreecehad somewhat clarified the situation with Eurozone debt.” And furthermore that “It will still be quite a difficult process forGreece’s economy, but it’s less uncertain than it was going back to the tail-end of last week.”

AUD/ GBP 0.6468
AUD/ EUR: 0.7521
AUD/ USD: 0.0347   
AUD/ JPY: 81.1456
Exchange rates as of 08.35, 7 November 2011

Composed by Monique Chapman
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