Australian Dollar Plummets To Multi-week Lows Against Majors
The Australian dollar lost ground on Tuesday morning in Asia as traders moved away from the riskier assets following the World Bank report, which revealed that the global recession will be deeper than it predicted in March. The Australian currency plunged to multi-week lows against other majors.
The World Bank cut its forecast for the global economy and warned of a large decline in international capital flows amidst the financial market fragility. The World Bank said it now expects the world economy to shrink by 2.9 percent this year, larger than its earlier prediction of a 1.7 percent decrease.
Tracking the overnight cues from Wall Street where stock prices tumbled after the World Bank predicted a sharper contraction for the global economy this year, the Australian market opened on a highly negative note today with stocks across various sectors plunging sharply on selling pressure.
Mirroring heavy across-the-board sell-off, the Australian benchmark index S&P/ASX 200 slipped to 3,800, losing as much as 118 points from its previous close. The index is currently trading 102 points or 2.6% down at 3,816.2. The broader All Ordinaries index is down by around 114 points or 2.92% at 3,797.
The Australian dollar fell to 74.39 against the Japanese yen around 10:40 pm ET, the lowest level since May 28. On the downside, the aussie-yen pair may likely target the 73.8 level. At Monday’s North American close, the pair was quoted at 75.36.
On the economic front, the Economics and Social Research Institute, Japan will release its Leading index data today. Meanwhile, the Cabinet Office will release the Coincident Index that measures the current economic activity based on a composite of indicators that track current business conditions in Japan.
Against the US dollar, the Australian currency reached a multi-week low of 0.7813 around 7:50 pm ET. This may be compared to Monday’s New York session closing value of 0.786. The aussie-buck pair is presently trading at 0.7831 with 0.777 seen as the next target level.
The Australian dollar tumbled to a 3-week low of 1.2479 against the New Zealand dollar by 7:50 pm ET. The aussie-kiwi pair is presently worth near Monday’s North American session closing value of 1.2502.
The Australian dollar slumped to a multi-week low of 1.7733 against the euro by 7:50 pm ET, compared to 1.7651 hit late New York Monday. If the aussie weakens further, support is seen at the 1.779 level. The euro-aussie pair is presently quoted at 1.7704.
The German Gfk consumer confidence survey for April, French consumer spending for May, French Business confidence report for June and the PMI reports from major European economies for the month of June are slated for release in the upcoming session.
From the US, the existing home sales for May and the Richmond Fed Manufacturing index for June are due out in the New York session today.
