RBA Lowers Inflation Forecast as AUDUSD Set for 4th Week of Falls

Australia’s dollar was set for a fourth weekly decline, the longest stretch since June, after the Reserve Bank cut its economic growth and inflation forecasts, fanning expectations it will lower interest rates.

Today’s statement followed comments from the RBA on Feb. 5 that the nation’s inflation outlook “would afford scope to ease policy further.” The so-called Aussie earlier touched the lowest in more than three months as Asian stocks fell, sapping demand for higher-yielding currencies. The currency erased that decline and New Zealand’s dollar strengthened after data showed imports grew in China by the most in 11 months.

“The reduction in growth and inflation forecasts is a cause for concern,” said Takuya Kawabata, an analyst at Gaitame.com Research Institute Ltd. in Tokyo, a unit of Japan’s largest currency margin company. “The recent weakness in the Australian dollar in part stems from speculation of a rate cut by the RBA.”

Bloomberg

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