The Australian dollar is sitting tight in late trading today after poor local data and awaiting tomorrow’s interest rate decision and monetary speech from the Reserve Bank of Australia.
After getting hammered yesterday, the Aussie dollar found strong support above the US71c mark and is now trading around US71.40c.
The latest TD securities inflation report from Australia released earlier today came in at -0.2 percent, which was well down on last month’s figure of 0.4 percent, marking the lowest reading on record.
The yearly figure, although not as bad, was also disappointing, coming in at 2.1 percent and falling from 2.3 percent a month earlier.
The figures confirm fears that inflation in Australia will continue to cause problems and will probably remain at the bottom of the RBA’s target for the foreseeable future.
Many analysts have changed sides in the last few weeks as data out of Australia continues to disappoint, with some now predicting that the Reserve Bank of Australia will take a more dovish tone tomorrow in their monetary speech after their latest interest rate decision.
With inflation at the low end of the scale and the Australian dollar higher than it should be according to RBA board member John Edwards, who recently noted he would be “comfortable” with the Aussie dollar at US65c, we may see the central bank talk down the currency tomorrow in an effort to stop the recent rally.