RMS 1.61% 61.0¢ ramelius resources limited

AUD set to fall

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    How long can the Aussie dollar hold out?
    The Australian dollar is defying Glenn Stevens. Despite the Reserve Bank of Australia cutting interest rates for the first time since August 2013 this week, abruptly ending a period of stability that saw rates remain on hold for a record period, the Aussie has held out.
    With the domestic cash rate now sitting at 2.25 per cent, its lowest ever mark, the announcement initially succeeded in spurring another bout of selling for the Australian dollar. It quickly plummeted to US76.3c on the news, a level not seen in over six years.
    Aussie’s rally bewilders
    But since then the majority of losses have now been re-captured, in a rally that’s left many investors scratching their heads. In the context of a rate cut as well as downgrades to inflation and growth outlooks, the Australian dollar did well to start the week above the US77c mark, a long way from last week's low of US76.25c.
    Previous support around the US80c mark is now providing substantial resistance, with the Australian dollar overall appearing stretched following a rally of any substance. We're eyeing the next resistance at US78c.
    13 JanAn unhappy new year for the Aussie dollar
    Given the combination of slower medium-term growth and low interest rates for longer, a weaker trade and fiscal position has now provided the platform for the Aussie dollar to head even lower through the year’s end.

    All eyes on the US
    Despite the more dovish domestic outlook, price action will also be greatly dictated by US employment gains as well the timing surrounding the US Federal Reserve’s decision to raise rates, which will fundamentally affect the strength of the world’s reserve currency.
    US non-farm payrolls enjoyed a positive result last week, with 257,000 jobs added in January versus the 228,000 expected. Figures for the previous month were also revised upward, from 259,000 to 329,000. The US participation rate picked up from a near four-decade low, with wages jumping by 0.5 per cent, the biggest lift in seven years.
    By far the most important outcome is the growth in wages and what this means for inflation. A pick up in inflation expectations is key for a more hawkish US Fed, with the chance of a July rate hike rising to 52 per cent.
    Friday's jobs numbers saw the US dollar rise against nine out of 10 of its major counterparts, with USD/JPY passing through 119 (a three -week high).
    Greenback: what’s the outlook?
    The near-term outlook for the US dollar remains neutral, keeping in mind we have witnessed an appreciation stretching seven consecutive months, combined with the fact that a rate rise is still potentially four months away.
    We’re now wary of potential profit-taking opportunities, given the market is already long in record numbers, with a worsening global outlook providing some fundamental support – fuelling demand for the US dollar due to the lack of a better alternative.
    With investors now eyeing lower lows, the outlook for the Australian dollar has shifted, with a range of US74c to US76c expected over the approaching three-month window.
    Michael Judge is Corporate Foreign Exchange Dealer at OzForex, a global supplier of online international payment services and a key provider of Forex news. OzForex Group Limited is a publicly listed entity with shares traded on the Australian Securities Exchange under the code "OFX".

    The experts can be wrong but I feel the Australia dollar will fall below 0.74 cents.
    Lets face it, the Australian economy is a train wreck with massive true unemployment, dying manufacturing sector, huge debt both personal and government and poor political leadership.
    Just need the USD price of gold to hover around current levels and Australia gold miners should all have a good year.
    Just my opinion of course.
    I expect todays trading to be slow; again.
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