Fundamental Comment

Aussie dollar slides since the beginning of the week, further fall inevitable


The Australian dollar fell Wednesday for the second straight session, dropping 1.2% since the start of the week, after hitting a two-week high against the US dollar last Friday.

The Aussie dollar slumped to a low of $0.7840 during today's trading session, while currently trading at $0.7849 after opening at $0.7881.

The main reason for the continued decline of the Australian dollar is the recovery of the Federal currency against major currencies, as the markets wait for the minutes of the Federal Reserve meeting later in the day.

On the other hand, Australia's construction index fell sharply in the fourth quarter of 2017 by 19.4% and the previous reading was revised up to 16.6%.

While Australia's wage index rose by 0.6% in the fourth quarter, compared to expectations of 0.5% increase, the IMF said the Australian economy faced a balanced risk in the near term and that keeping interest rates low would help to balance these risks.

The economy is expected to grow by 2.9% this year and expand by 3.1% in 2019. Inflation is to hit 2.1% In 2018 and 2.2% in 2019.

The IMF also recommended the need to expand infrastructure investments and exploit the current credit environment to accelerate growth and to maximize long-term production rates.

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