The Australian dollar has slipped to a six-week low against its US counterpart, before regaining some ground, as the US dollar has extended its recent gains.
At 0635 AEDT on Friday, the Australian dollar was worth 78.00 US cents, down from 78.25 US cents on Thursday.
Westpac’s Imre Speizer says the US dollar had extended its recent strength, alongside bonds, while the Australian dollar was among the worst performing currencies in the offshore session.
‘Defensive currencies and the GBP (British pound) were the best performers on the day, the AUD and NZD the worst,’ he said in a morning note.
‘The USD was resilient, perhaps displaying its defensive qualities, (with) the US dollar index up 0.1 per cent on the day.
‘(The) AUD fell from 0.7840 to 0.7782 – the lowest since 28 December.’
The key event risk for the local currency on Friday will be the Reserve Bank of Australia’s statement of monetary policy and the Australian Bureau of Statistics’ housing finance lending data for December, both due out in the morning.
‘Commentary in the RBA governor’s policy decision statement suggests that the growth and headline inflation forecasts are likely to be unchanged but no guidance was given on their underlying inflation forecast.
‘December housing finance is expected to fall one per cent. (But) Westpac expects a 1.5 per cent drop with financing holding up better than expected through 2017’s slowdown despite auction activity, turnover and price growth slowing materially in the major eastern markets.’
Mr Speizer says he thinks the local currency will retain its downward momentum on Friday ‘towards 0.7730 if risk aversion and USD strength persist’.
The Aussie dollar is also lower against both the yen and the euro.
CURRENCY SNAPSHOT AT 0635 AEDT ON FRIDAY
One Australian dollar buys:
* 78.00 US cents, from 78.25 cents on Thursday
* 84.93 Japanese yen, from 85.81 yen
* 63.59 euro cents, from 63.76 euro cents
(*Currency closes taken at 1700 AEDT previous local session)