A Credit Suisse Group AG index shows traders see little change to Australia’s cash rate over the next 12 months, after expecting it to be as much as 22 basis points higher in April. The Aussie dropped on May 21 to the lowest in more than two weeks, extending a slide below the 23.6 percent Fibonacci retracement level of its advance from its 2014 low of 86.60 on Jan. 24 to a peak of 94.61 on April 10, according to data compiled by Bloomberg.
“The path of least resistance in the Aussie, certainly in the medium term, is down,” Chris Weston, the Melbourne-based chief market strategist at IG, said in a phone interview yesterday. “Over the course of the year, I’d be looking for downside structures in terms of the Australian dollar against the greenback.”
The Aussie is set for its first monthly drop since January, as the RBA signaled stability in borrowing costs and consumer confidence weakened following the announcement of Prime Minister Tony Abbott’s plans to trim the federal deficit. The currency also slid as prices for iron ore, Australia’s biggest export, slumped to the least in 20 months.
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