Weaker than expected US consumer prices and consumer sentiment added to evidence of sputtering global growth. With such concern lingering risk aversion is again hampering the growth of higher yielding but riskier investments such as the Aussie.
The Australian Dollar was also hit by Prime Minister Julia Gillard setting elections for 21st August. Speculation is rife that the central bank will hold off on raising interest rates next month with an election looming. Central bank meeting minutes further indicate that interest rates are unlikely to rise. The minutes show that previous rate hikes have given the Central Bank a degree of flexibility amidst the global uncertainty.
US Federal Reserve chairman Ben Bernanke gave testimony to Senate of an American economy that was “unusually uncertain.” His testimony has further stimulated a risk averse market so hampering the growth of the Aussie. Dr Bernanke predicted only ‘moderate growth, a gradual decline in the unemployment rate, and subdued inflation over the next several years” for the world’s biggest economy.
But losses to the currency were limited with stocks in China faring better than anticipated and news of private US equity firms TPG and Carlyle wining a bidding war for Australia’s hospital owner, Healthscope. TPG and Carlyle have agreed to pay $1.73 billion for Healthscope, the largest buyout deal seen in Australia since 2007.
AUD/ GBP: 0.5816
AUD/ EUR: 0.6975
AUD/ USD: 0.8941
AUD/ JPY: 78.14
Exchange rates as of 16:50, 23 July 2010
Note: The above exchange rates are based on “interbank” rates.
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www.australiantimes.co.uk/currency
Australian dollar Weakens on Fears of Double-Dip Recession