AUSTRALIAN DOLLAR SLUMPS BELOW 74 US CENTS ON GREEK DRAMA
Thursday, July 16, 2015
The Australian dollar has fallen sharply, as violent protests over Greece's debt bailout and increased prospects of a US rate rise this year send a shudder through investors around the globe.
Having risen sharply in the wake of stronger-than-expected Chinese growth figures, the currency fell more than 1 cent from yesterday's peak to 73.7 US cents by 8:00am (AEST).
The Greek unrest would not have helped the currency, but North American interest rates were more likely the key to its overnight decline.
Federal Reserve chairwoman Janet Yellen faced a Congress committee overnight, reiterating that US interest rates will begin rising by the end of the year, for the first time since before the global financial crisis.
"If the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate target," she said.
"A decision by the committee to raise its target range for the federal funds rate will signal how much progress the economy has made in healing from the trauma of the financial crisis."
A surprise interest rate cut by the Bank of Canada, taking the nation's key rate to 0.5 per cent, would also have weighed on the Australian dollar.
As a commodity-based economy like Australia, Canada's rate cut quickly fuelled speculation that the Reserve Bank will need to ease further.
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