The Australian dollar held up remarkably well in today’s trading session considering a round of disappointing data but some say the strength won’t last for to long and there may be a bloodbath on the way
The latest Westpac consumer confidence survey hit the market at -4.7 percent which shows that consumer confidence is seriously waning and this is on top of the local property market which tumbled last year by double digits.
"The falls follow volatile equity markets in December and early January, heightened media attention around the deteriorating housing market and some talk of lower official cash rates. Up until the January reading consumer sentiment was holding above its long term average. One of the transmission channels for dwelling price falls to the economy is through weaker consumer sentiment," says Joseph Capurso, a strategist at Commonwealth Bank of Australia.
Now the question is, will the Reserve Bank of Australia have the nerve to cut interest rates which some say is the only to breath some life back into the economy and attract business investment but at the same time will be a disaster for the Australian dollar.
The economical problems in China are also adding to the woes and if this gets any worse some say the Aussie dollar could be headed for an all time low.
“The Aussie dollar is going to get absolutely crucified and could suffer a 25-30 per cent fall,” says Colin Harte, a London-based strategist for BNP Paribas Asset Management.
“You could have a bloodbath, because the Reserve Bank of Australia could allow the currency to go lower, in order to attract funding and domestic inflation to ease the pain.” He added
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