"At some point in the future the Australian dollar will be materially lower than it is today"
- Glenn Stevens, RBA Governor
Australian currency reached the lowest level in two weeks against the greenback, hitting 0.95, while EUR/AUD soared to the highest since October 3 on RBA Governor Glenn Stevens' comments the Aussie would be significantly lower in the future. While the Reserve Bank of Australia has not made any adjustments to its monetary policy for the last two meetings, they are closely monitoring the impact of earlier cuts on the economy. Meanwhile, Stevens pointed out the current level of domestic currency is not supported by productivity and costs in the economy, while terms of trade are expected to fall rather than rise.
Earlier this month, reports showed that both Oz companies and consumers felt more confident during the last month. Companies are benefitting from political and economic factors, like positive results of the federal election, record-low interest rates, improved economic data from China and better consumer mood within the nation. Despite this encouraging signs, Stevens warned that it is not clear to what extent and when these positive trends in sentiment would translate into improved willingness to spend, hire more staff or step up on investment.
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