The Australian dollar is on the verge to break to a fresh 22-week high, but the momentum has been slowed down due to fading liquidity. On the foreign exchange market, the Australian dollar was seen quoted almost flat against the US dollar and settled at 0.6920, almost unchanged from Monday’s closing rate.
During the London trading hours, the AUD/USD exchange rate was seen trading between a range of 0.6925 and 0.6911 against the US dollar. As traders take off for the celebration of Christmas day the market liquidity should continue to dry off.
In other news, Westpac the second largest investment bank in Australia has lowered its Aussie forecast by 9% and sees the domestic currency trading at 0.6600 in 6 months’ time and at 0.6700 by the end of 2020. Among the “big four banks” in Australia, Westpac has the most pessimistic forecast for the Australian dollar.
The Australian economy expanded by 0.4% in the third quarter of 2019, which was below the market consensus and weaker than the Q2 reading of 0.6%. At the same time the annualized GDP growth rate stands at 1.7%. The labour market statistics are also painting a dire picture, which has been the catalyst for the central bank to slash interest rates to a record low of 0.75%.
Latest RBA minutes have revealed that the Australian central bank will assess at its next policy meeting in February 2020 whether to cut rates to a new record low to spur growth.
Elsewhere, the price of the precious metal Gold was the top performer asset hitting a 7-week high after it briefly touched the big psychological number $1,500. On Tuesday, the price of Gold settled at 1.499.30 registering a 0.93% gain. The safe haven bids coupled with recent weaker US data were the main drivers for the price of Gold.
The dollar index, which gauges the greenback’s strength against a basket of major currencies, traded unchanged and settled at 97.68 versus 97.67 previous closing price.
The Australian stock and bond markets are closed on Christmas day.
