"It was not so surprising that the Australian dollar has declined over the past year. There were good reasons to think that the Australian dollar has for the past couple of years been on the high side of fundamentals."
- Christopher Kent, Reserve Bank of Australia (RBA) Assistant Governor
The Australian Dollar recovered on Friday, after it was pushed lower by disappointing domestic jobs data. AUD/USD made an attempt to penetrate the key resistance at 0.90, and according to Dukascopy sentiment index, the pair will manage to break it soon, as 65% of all opened positions are long. While the pair received a lift from weak data from the United States, RBA's comments were not able to limit its appreciation.
The Reserve Bank of Australia deputy Christopher Kent claimed the domestic currency has been overvalued for some time and is still hampering the economic recovery. Given that the commodity cycle, that was boosting growth, is now in a downturn, the nation's terms of trade have been declining since 2011, while mining projects are moving to the production phase. Kent also stressed out that strong currency was needed during the mining boom, however amid waning trade and investment, lower levels of the exchange rate will be welcomed.
His comments echoes a statement given earlier that week by the RBA Governor Glenn Stevens, who mentioned stable exchange rate as one of the key factors for economic prosperity, however, it seems that his deputy has slightly more dovish views on the matter.
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