Negative start of the Aussie in 2014
The Australian dollar plunged to its lowest levels in nearly
three and a half years (since August 2010) hitting a low of $0.8776.
The drop of the Aussie come on worse-than-expected employment data in
December reported by the Australian
Bureau of statistics , making it the worst performing Group-of-10 currency in
the last year.
The Jobs data raised concerns of a slowdown in
Australian economic growth, which could in turn encourage the RBA to further
cut rates.
Meanwhile, the World Bank’s downgrade of China for 2014-2015
growth outlooks on Wednesday would add further pain to the Australian dollar’s
fundamental outlook since China is Australia’s top export market and an
economic downgrade of China will hurt Australia potential growth.
Furthermore, many analysts assume that If the U.S Federal
Reserve Bank continues to cut its asset purchases this year on improving US
economy and encouraging US data, it will boost the U.S. dollar and therefore
weaken the Aussie.
2014 outlook for the Aussie may look very similar to the Euro’s
future.
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