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Australian dollar plunges fresh 4yrs low

Australian dollar plunges fresh 4yrs low

SYDNEY: The Australian dollar fell to fresh four-year low of US82.35¢ on Tuesday on the back of dull trade confidence statistics and another major bank switch into the rate cut camp.
The dollar is expected to extend its recent slide throughout the remainder of the week, as more data is released from China, keeping it under pressure.
National Australia Bank’s monthly business survey for November on Tuesday highlighted a sharp draw back in business conditions, falling eight points to five on the sale. Business confidence was also at its lowest point since mid-2013, dropping four points.
The results of the survey spurred NAB to become the second big four bank to alter its interest rate predictions, and lower its dollar forecast to US75¢ by the end of 2016.NAB also changed its interest rate forecast, saying it now expects two cuts of 25 basis points in 2015, in March and August. Previously the bank had said the next move by the Reserve Bank of Australia would be a rate hike.
NAB predicted a 30 per cent chance the Reserve Bank would cut rates for a third time in 2015. Otherwise, it forecast the official cash rate would remain on hold until late 2016.
Late last week Westpac became the first of the big four to predict the Reserve Bank would lower rates next year. The decision was motivated by last week’s weaker than anticipated gross domestic product figures.
Goldman Sachs and Deutsche Bank are two other banks that last week changed tack on rates and are now expecting more easing. But the other big two banks, ANZ and CBA, as well as a majority of economists surveyed by Bloomberg still expect the the next move by the RBA to be a rate rise, after an extended period of unchanged monetary policy.
ANZ said in a note on Tuesday it expected the Reserve Bank to leave rates on hold until November 2015. But the bank acknowledged a downside risk.
“We acknowledge the risks are skewed towards some easing in 2015, particularly if further weakness in the currency fails to materialise or the unemployment rate increases sharply,” ANZ said.
Financial services firm UBS said the outlook for the dollar had darkened, as it slipped ever closer to US80¢.
“[It’s] a pretty bearish backdrop for AUDUSD, and we see good reasons to expect a test of 0.80 during 2015,” it said in a note.In early trade the dollar was trading just below US83¢, before being pushed lower by the NAB business survey data.OzForex corporate forex dealer Matt Richardson said the dollar also remained under pressure from weak China data.