AUD/USD down to 0.9480 as Yield Gap to Treasuries Narrows

The Australian dollar fell to the lowest in more than two weeks as the extra yield the nation’s bonds offer over U.S. counterparts shrank to the narrowest this month, damping demand for its assets.

The Aussie extended a decline from yesterday against most major peers that came after Reserve Bank Governor Glenn Stevens said the currency is likely to be “materially lower” in the future. New Zealand’s dollar maintained a two-day advance versus Australia’s before the smaller nation’s central bank meets tomorrow amid bets policy makers will increase benchmark interest rates by 59 basis points within a year.

The “interest-rate differential is moving away from the Aussie dollar,” Paresh Upadhyaya, the Boston-based director of currency strategy at Pioneer Investment Management Inc., said in a Bloomberg Television interview. “There’s still room, especially if inflation surprises on the downside, for the RBA to cut again.”

Bloomberg

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.