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Currency Market Analysis

Nov 27, 2019 | Currency Market Analysis

Global Themes

Aussie higher as RBA “rules out” negative rates

The Australian dollar dominated headlines overnight after a key speech from Reserve Bank of Australia governor Philip Lowe.

The RBA chief signalled that negative interest rates are “extraordinarily unlikely” in Australia with the central bank instead flagging quantitative easing as a real possibility.

Lowe said in his prepared remarks: “It is not clear that the [international] experience with negative interest rates has been a success.”

Lowe’s main concerns is that “negative rates create strains in parts of the banking system that can impair the ability of some banks to provide credit.”

Instead, Lowe signalled that the most likely outcome would be quantitative easing – or money printing – with the RBA likely to buy government bonds in the secondary market.

Hopes pressure greenback

In other markets, improving hopes around trade boosted sharemarkets and caused safe haven markets to fall.

The USDSGD fell 0.1% while the JPYSGD fell 0.2%.

US data

The focus remains firmly on the US tonight with a series of key releases due.

September-quarter preliminary GDP will provide further detail on the US economy while durable goods orders for October will provide a more up-to-date, but less detailed reading.

Also due for release, the US personal consumption and expenditure measure, the US Federal Reserve’s preferred reading for inflation.

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