The Australian dollar lost ground in
today, falling about 1 percent against the U.S. dollar, the
Japanese yen, the British pound and the euro. The main driver for
the decline came from the Reserve Bank of Australia, which slashed
rates without warning by 50 basis points.
Over the past year, the Australian
performed fairly well against the euro, gaining more than 6 percent
since last April, while declining 5 to 6 percent against the yen
and the U.S. dollar.
"In our view, the
of further cuts has clearly risen and we remain bearish on the
Australian dollar," currency trading analysts from
Suisse told the
export-dependent economy remains tightly tied to China and that
nation's industrial growth; mining giants like Rio Tinto (
) supply the world's second-largest economy with massive quantities
of iron, coal and aluminum to sustain its building boom.
Chinese growth looked somewhat sluggish in the first quarter: Gross
domestic product increased 'just' 8.1 percent, the lowest number in
almost three years. On the plus side, manufacturing activity
appears poised for something of a recovery, as its Purchasing
Managers Index ticked up to 53.3 in April from 53.1 in March.
The RBA may be taking its monetary policy cues from the trends in
China and the rest of East Asia, with the rate cut aimed at
stimulating a little more domestic growth,
and spending. The Aussie dollar's relative strength over the last
two years - up more than 12 percent against the U.S. dollar and
more than 13 percent against the euro - have hurt those domestic
industries which rely heavily on exports, like the country's famed
The news had a limited downside impact on the iShares MSCI
), which slipped 0.2 percent to $23.79 per