The Australian dollar is trading slightly higher today as expectations of an imminent rate hike from the US Federal reserve fade on the back of recent disappointing data.
At 8.06am (GMT) the Aussie dollar was trading at US73.95c up 0.29 percent from Friday’s trading.
With a rate rise from the US Fed not expected now until at least September, the Australian dollar may have found a little bit of breathing space.
Not all are convinced the currency is headed higher including Vimal Gor, the head of income and fixed interest at BT Investment Management who noted that the Australian population must start living within their means, and not like they did before the financial crisis,
“This reliance on outside capital to fund our lavish lifestyle, which is still stuck in 2006, puts us in a very different situation to pretty much every country that is currently running a zero or negative interest rate policy” he said
“Economic growth in Australian dollars has been so weak for a number of years, even as real economic growth continues to show some pretty encouraging headline numbers yet we keep sending this growth overseas through high imports and paying out on past borrowings” he added.
In one of the most bearish positions in recent times Mr Gor noted that the Aussie dollar may be headed for a huge tumble below US50c, especially if commodities head south,
“A shock downside could easily see it move to 40c against the US Dollar if current trends
continue, commodities fall to lows again and economic growth deteriorates,” he said.