Treasury announcement weakens Australian Dollar

THE Australian Dollar weakened on Friday due to the National Treasury giving the Reserve Bank of Australia (RBA) permission to cut the interest rate. The Aussie opened the week on 1.4838 to the British Pound and closed 1.504 to the Pound on Friday.

The Treasury announced a change in monetary policy direction as a way to relieve pressure on the economy, due to currency gains over the last while. The last two RBA meetings have left the rates unchanged at 3.5 percent. “While the Australian dollar is now well above its post- float average, it appears to be at a level consistent with what might be expected, given the changes in its fundamental determinants,” said the Australian Treasury on Friday.

Nervousness in the market prevails this week as the European leaders prepare to meet and discuss the region’s ongoing debt crisis. Investor appetite for riskier assets such as the Aussie has heightened as the European Central Bank looks at trying to cap bond yields in the Eurozone.

The US Fed will release minutes of last Wednesday’s committee meeting where it refrained to add any measures boost the US economy. The Fed has pledged to keep its rate near zero until late 2014 in attempts to promote growth. “A failure to ease conditions by the Fed in September would knock the Aussie lower.” said Mike Jones, a currency strategist in Wellington at Bank of New Zealand

Tuesday will see the RBA meet to discuss the expected rate cut that the Australian Treasury previously declared.

GBP / AUD: 1.5003
EUR / AUD : 1.1793
USD / AUD : 0.9551
NZD/ AUD : 0.7734

Exchange rates as of 09:58, 20 August 2012

Composed by Elizabeth Britz on behalf of 1st Contact

Note: The above exchange rates are based on “interbank” rates. If you want to transfer money to or from Australia then please register/login on our website, www.1stcontactforex.com, or call us on 0808 141 2335 for a live dealing rate. Make use of our Rate Notifier to send you alert when the Australian Dollar exchange rate reaches levels you are looking for.