The Australian dollar dropped below .9900 for
the first time in 11 months on Tuesday, after
Australia’s government jumped on the
austerity bandwagon and unveiled a cost-
cutting budget that heightened the possibility
of further interest-rate cuts.
The news comes on the back of last week’s
rate cut, which surprised the markets, and
took the wind out of the Australian dollar’s
sails. The Aussie ended the U.S. session
down 0.64% against the dollar at .9889.
Meanwhile there was yet more disappointing
data coming out of the eurozone; firstly the
ZEW index of German economic sentiment
ticked up to 36.4 from 36.3 in April, well
below economists expectations of 38.3, and
the index of current conditions fell to 8.9
from 9.2 in April, indicating that the German
economy could struggle to recover from a
0.5% contraction in the fourth quarter.
It wasn’t all bad news for the euro however,
a separate report showed that eurozone
industrial production rose by a seasonally
adjusted 1% in March, more than double
expectations for a 0.4% increase. The
greenback ended the U.S. session up 0.28%
against the euro at 1.2939.
source:forexnews
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