Australian dollar readies for rate cut

On Monday the Australian dollar fell to a new 5½ year low as worries over the quantitative easing program in Europe and the Greek election results, where the Anti austerity party Syriza won by an overwhelming majority with a promise to renegotiate Greece's debts.

At (AEDT) the Aussie dollar was trading at US79.09c after falling as low as US78.56c in early trade.

With 97% of the votes counted, the leftist party Syriza was set to have 149 seats in parliament, one short of the 151 it needs to rule outright but will have no trouble finding a smaller party who agrees with their principles,

A the top of the party's agenda, and creating uncertainty in the financial markets, is the planned restructuring of the credit given to Greece by the "troika" to bail them out of the 2008 financial crisis in return for sharp Austerity measures.

The “troika” consisting of the European Central Bank, the European Commission and the International Monetary Fund have lent Greece money to keep it afloat in recent years.

With last week's decision by the Bank of Canada to lower interest rates and the European Central Banks planned quantitve easing program analysts now believe that the RBA will have to start some sort of their own monetary program by lowering interest rates.

"What we're seeing is a lot of central banks are making surprise decisions at the moment ,Canada, India, Denmark. So in this environment of central banks pushing rates down and adopting easing strategies it becomes a lot more respectable to do that," noted Westpac chief economist Bill Evans.

"After the Bank of Canada, an RBA move downward "wouldn't surprise the market as much", Mr Evans said.

The rates market is now factoring in a 40% chance of a rate cut at the RBA's next meeting in February.

The Key to the RBA's move on interest rates will be the release of the latest CPI figures from Australia due out later this week where the Central bank will be hoping the number meets their target Inflation range of between 2% and 3%.

Anything less may see them making a move on rates in February as a growing number of analysts are starting to predict.