Australian dollar rises slightly

The Australian dollar is only slightly changed Wednesday, buying 69.61 US cents from 69.60 US cents on Tuesday.

Yesterday, the local currency was on track for a sixth straight session of gains against a US dollar weakened by expectations for an aggressive cut in interest rates by the Federal Reserve next month.

The Australian dollar climbed to a two-week high of 69.72 US cents on Tuesday and was last quoted at 69.65.

The New Zealand dollar also jumped to a two-week top of 66.46 US cents.

The six-day rally comes as yields on US Treasuries inched lower with Fed futures fully pricing in a quarter-point easing and a real-chance of a 50 basis point cut at the next FOMC meeting in July.

The strength in the antipodean currencies was limited to the US dollar, however, as Australian and New Zealand central banks themselves are on an easing path.

Against the Japanese yen and the euro, the currencies were hovering near multi-month lows.

The Reserve Bank of Australia (RBA) is widely expected to cut interest rates to a new record low of 1.00 per cent at its July 2 meeting after already lowering once in June.

However, given more aggressive pricing for the Fed many analysts expect the Aussie may not fall much further despite easings at home, a concern that RBA Governor Philip Lowe highlighted on Monday.

“But if everyone is easing, there is no exchange-rate channel,” Lowe told a public forum in Canberra.

“We trade with one another, we don’t trade with Mars, so if everyone’s easing, the effect that we get from exchange-rate depreciation via the transmission mechanism isn’t there.”