Australian Dollar (AUD) Plummets on Dovish RBA Threat to Cut Interest Rates

Published: 21 May at 1 PM Tags: Euro, Dollar, Pound Sterling, America, UK, Eurozone, Australian Dollar, New Zealand Dollar, Canadian Dollar, Australia, New Zealand, USA, Canada, China, Italy,

Pound Sterling (GBP)

The Pound fell against many of its major competitors today as Brexit uncertainty continues to haunt UK markets.

This came after the Chancellor Philip Hammond warned that there are many Brexiteer MPs pushing to ‘hijack’ the referendum and push for a no-deal between the UK and the European Union.

Hammond said:

‘On the populist Right, there are those who claim the only outcome that counts as a truly legitimate Brexit is to leave with no deal. [T]o advocate for no deal is to hijack the result of the referendum, and in doing so, knowingly to inflict damage on our economy and living standards.’

US Dollar (USD)

The US Dollar has eased today following the speech from the Chair of the Federal Reserve, Jerome Powell, who took a general balanced tone saying that business debt was rising, but this posed little threat to the US economy.

Many ‘Greenback’ traders are looking ahead to the US existing home sales figures for April today, which are expected to improve.

Ongoing US-China trade tensions, however, are weighing on market confidence in USD, with some analysts believing the trade war will continue to escalate.

Euro (EUR)

The Euro has remained generally subdued ahead of this week’s European Elections, with fears rising that integrity within the EU will be challenged by Eurosceptic parties such as the UK’s Brexit Party and Italy’s deputy Prime Minister, Matteo Salvini.

The Belgian MEP, Guy Verhofstadt, challenged Salvini, saying:

‘Hereby I challenge you to a one-on-one debate, as people have the full right to know what devil's plan you have in mind. Tell me where you want to do it, in Brussels or in Italy. I will be there.’

With a lack of Eurozone economic data due out today, many single currency traders are bracing for the speech by the President of the European Central Bank Mario Draghi tomorrow.

Australian Dollar (AUD)

The Australian Dollar sank following comments from the Reserve Bank of Australia (RBA) Philip Lowe’s dovish comments about a possible rate cut next month.

Lowe said:

‘A lower cash rate would support employment growth and bring forward the time when inflation is consistent with the target. Given this assessment, at our meeting in two week’s time, we will consider the case for lower interest rates.’

New Zealand Dollar (NZD)

The New Zealand Dollar was weakened by the publication of the New Zealand credit card spending figures for April today, which sank below forecast and held steady at 4.5%.

‘Kiwi’ traders will be awaiting the publication of the New Zealand retail sales figures for the first quarter today, which are expected to ease at 0.0%.

Canadian Dollar (CAD)

The Canadian Dollar rose today against many of its competitors following the US President Donald Trump’s announcement that he would lift tariffs placed on Canadian steel and aluminium.

Canadian President Justin Trudeau said that is was ‘pure good news’, saying that the tariffs were ‘harming workers and consumers on both sides of the border’.

As of Tuesday, 21st May 2019, the Pound Sterling currency rates mentioned within this news item were as follows:

GBP EUR exchange rate was 1.138, GBP USD exchange rate was 1.2705, GBP AUD exchange rate was 1.845, GBP NZD exchange rate was 1.9519, GBP CAD exchange rate was 1.7029, and GBP CNY exchange rate was 8.7694.

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