Oil prices have been falling amid doubts producers can agree to cut output and copper has hit a one-month low on uncertainty over China’s economy, prompting a softening of the Aussie dollar.
The Aussie dollar has fallen more than half a US cent amid a commodity price slump.
At 0630 AEST on Wednesday, the local unit was trading at 75.35 US cents, down from 75.87 cents on Tuesday.
Oil prices have been falling amid doubts producers can agree to cut output and copper has hit a one-month low on uncertainty over China’s economy.
The Aussie initially pushed up to 76.35 US cents on the news, but has since softened.
IG market analyst Angus Nicholson says the currency has strengthened roughly 6.5% against the greenback since the last RBA meeting.
But the central bank said the gains were mostly driven by rising commodity prices and other central banks’ monetary policy settings.
This presumably alludes to the US Federal Reserve’s dovish stance and negative rate settings in Europe and Japan.
‘They seem disinclined to cut rates purely on this basis and are likely to wait for these temporary factors to dissipate,’ Mr Nicholson said.
ANZ head of economics Felicity Emmett said while the higher exchange rate rate may irk the bank, it is unlikely to trigger a rate cut.
‘Rather, it will be looking for evidence in the data that the level of the currency is turning into a headwind for growth,’ she said.
At 6.30am on Wednesday, 6 April one Aussie dollar was buying:
75.35 US cents, from 75.87 cents on Tuesday*
83.13 Japanese yen, from 83.72 yen
66.20 euro cents, from 66.69 euro cents
*Currency closes taken at 1700 AEDT previous local session
AAP
