It’s been a strange two months for the Aussie dollar, and the outlook is shaping up to be increasingly negative.
After reaching as high as $.7355 yesterday, it is now trading at .722, and the fall over the past 48 hours has been rapid:
The question is now whether this downward trend will continue.
Markets and Money’s Greg Canavan is predicting a serious crash in the value of the Aussie dollar. You can learn how to protect your wealth by getting our report for free here.
Australian GDP report fails to meet expectations, Aussie dollar slides
Previously, it was improved trade surplus figures providing the impetus for a rise.
This time, it is Australia’s Q3 GDP report driving the downward slide.
According to the Australian Bureau of Statistics (ABS), and as reported by Business Insider, quarterly seasonally adjusted growth slowed to 0.3% meaning that over the last year GDP has grown by 2.8%, well below the 3.3% that many analysts expected.
This now represents the weakest pace in two years.
Bruce Hockman, Chief Economist at the ABS, said that ‘The household sector drove domestic growth with increased consumption supported by moderate rises in household income.’
The problem is, despite a rise in household income, the property market remains a major question mark.
Property market, interest rates and Aussie dollar all tied together
In our most recent discussion of interest rates, we highlight that in this area, even the RBA doesn’t know how much risk there is from a slowing property market.
Perhaps further tamping down on the outlook for the Aussie dollar, is a potential shift in sentiment regarding where the RBA will go next.
One prominent analyst has broken ranks and suggested the next move for the RBA will be a cut, not a hike.
Per Business Insider, Shane Oliver of AMP Capital, says the following on the RBA:
‘Given the combination of falling house prices, tightening credit conditions and constrained growth, which will keep wages growth weak and inflation below target, we are changing our view on the RBA from being one of rates on hold out to second half of 2020 to now seeing the next move being a rate cut… When it does start cutting the RBA will likely stick to 0.25% increments, and since rate moves are a bit like cockroaches, there is likely to be more than one.’
But this comes as no surprise.
Markets & Money has been screaming from the rooftops that the RBA will be cutting rates, not raising them.
You can find further analysis of why they could be cut to zero, here.
Going forward, the prospect of rate cuts could create downward pressure on the Aussie dollar.
For Markets & Money
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