Asia Recap: Looks like $0.95 was the limit for RBA Stevens

By FXstreet.com | July 02, 2014 AAA

FXStreet (Bali) - The AUD got completely annihilated during the Asian session, courtesy of a dovish RBA Governor Stevens, who managed to talk down the currency quite successfully after the rate hit USD 0.95 yesterday.

While the step up in rhetoric towards the Australian Dollar was not entirely unexpected, Stevens even let a gently hint on rates more likely to go lower before going higher. On the currency, Stevens said that investors are under-estimating the risk of sharp fall in A$ at some point, adding that he is not seeking to actively "jawbone" the currency lower, also saying the AUD is overvalued by most measures, and by more than a few cents.

On rates, Stevens said not to have contemplated tightening, even noting that he could drop reference to stable rates long before giving any thought to tightening. Stevens added that monetary policy remains very accommodative, but still has ammunition on rates. To make matters worse for the AUD, Australia's retail sales for May stood at -0.5% m/m vs 0% exp, with the only positive note being Australia's building approvals for May, up +9.9% m/m vs 3% exp.

Earlier in the session, Australia's AIG performance of services index for the month of June came at 47.6 vs 49.9 prior, with China non-manufacturing purchasing managers index (PMI) for June coming at 55.0 vs 55.5 prior, while China's HSBC HSBC/Markit services PMI for June was 53.1 vs 50.7.

The rest of G10 currencies kept its familiar levels, with the US Dollar a tad firmer following the major progress seen against the Aussie. The Japanese Yen was a little lower today, while the Kiwi recovered from early AUD-led losses.

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