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Forex - AUD/USD falls as traders see more downside

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Investing.com - The Australian dollar traded lower against its U.S. counterpart during Tuesday's Asian session as traders speculated there is more downside in store for the suddenly downtrodden Aussie.

In Asian trading Tuesday, AUD/USD fell 0.38% to 0.9772. The pair was likely to find support at 0.9712, Friday's low and an 11-month low and resistance at 0.9827, Friday's high.

Since the global financial crisis ended, the Aussie has been the best-performing developed market currency against the greenback, but that trend has started to erode in recent weeks. The Reserve Bank of Australia recently cut interest rates to 2.75% from 3% and traders are betting RBA will further pare rates in anticipation of Australia's mining boom ending this year.

Despite its status as a risk-on, commodity currency, the Aussie gained favor among global central banks and traders alike in recent years due to Australia's high interest rates and AAA sovereign credit rating.

Those factors have largely been ignored in the wake of RBA's recent rate cut and news that some hedge fund scions are bearish on the Aussie. Last week, Goldman Sachs said AUD/USD could fall as low as 0.8000. Other market participants see a near-term decline to 0.9000 as likely, a fall that would come after AUD/USD flirted with 1.0500 earlier this year.

Still, the lower Aussie could be just the tonic the country's exporters need. An improving export market due to the weaker currency could provide a lift to already sturdy Australian equities, but it could take several months for the impact of RBA's latest rate cut to bear fruit.

Elsewhere, AUD/JPY inched down 0.02% to 100.33 while AUD/NZD fell 0.12% to 1.1986. GBP/AUD rose 0.22% to 1.5593.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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