Australian dollar hits four-month low as commodity prices sink
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The Australian dollar sank to its lowest level in four months as commodity prices sank and the Federal Reserve looked set to raise interest rates at its June meeting.
The dollarydoo was was down 0.2 per cent in Asia at $0.7409, its lowest level since January 10, under pressure today as data showed the nation’s trade surplus eased to A$3.11bn in March from A$3.66bn the previous month, and below economists’ expectations.
Paul Dales at Capital Economics thinks Australia’s biggest surpluses are now in the past (December was a record) and will decline further over coming months as export values fall. He said:
The latest drop in the iron ore price suggests that the 4% m/m rise in iron ore exports in March probably won’t be repeated in April. And the disruption to the volume of coal exports caused by Cyclone Debbie in early April suggests that the total value of coal exports may fall by even more than the 6% m/m drop in March.
The Aussie tumbled 1.5 per cent on Wednesday – its biggest one-day drop since the US presidential election – weighed down by commodity prices and a more hawkish outlook for US interest rates.
Elsewhere, the British pound was up 0.1 per cent at $1.2875, recovering about a tenth of Wednesday’s decline after UK prime minister Theresa May denounced “threats” from the European side of Brexit negotiations.
The Japanese yen was 0.1 per cent softer at ¥112.81 per dollar, its weakest level since mid-March and on track for a sixth straight decline.
The dollar index, a measure of the US currency against a basket of global peers, was up 0.1 per cent on Thursday in Asia after a 0.2 per cent gain in the previous session.