Between the hawkishness of the Fed and last night’s disastrous inflation report, the Aussie dollar was the day’s worst performing currency.
The Aussie dollar has extended its losses as shockingly weak inflation figures reverberate around global markets.
At 0700 AEST on Thursday, the local unit was trading at 75.82 US cents, down from 76.11 cents on Wednesday.
The currency is still reeling from a surprise slump in consumer prices which raised the chances of a budget day interest rate cut to the lowest level ever recorded.
Meanwhile, the Federal Reserve has kept its interest rates unchanged but has signalled confidence in the US economic outlook, leaving the door open to a rise in June.
As a result, the Aussie dollar has suffered its largest one-day loss in eight months, BK Asset Management managing director of FX strategy Kathy Lien says.
‘Between the hawkishness of the Fed and last night’s disastrous inflation report, the Aussie dollar was also the day’s worst performing currency,’ she said.
Ms Lien said the benign inflation print sparked concern the Reserve Bank would cut the cash rate to 1.75% next Tuesday, just hours before Treasurer Scott Morrison delivers his first budget.
‘The speculation of easing is likely to grow further ahead of the meeting, leading to ongoing weakness in the currency,’ she said.
At 7am on Thursday, 28 April one Aussie dollar was buying:
75.82 US cents, from 76.11 cents on Wednesday*
84.52 Japanese yen, from 84.60 yen
67.08 euro cents, from 67.24 euro cents
110.19 New Zealand cents, from 110.64 NZ cents
52.22 British pence, from 52.15 pence
*Currency closes taken at 1700 AEST previous local session
AAP
