The Australian Dollar gets hit hard twice overnight

Tuesday night, the Australian Dollar slipped against its US counterpart, undermined by the Dollar’s strength and a decision from rating’s agency Moody’s to downgrade the long-term credit rating of Australia’s big four banks. Meanwhile, the minutes of the RBA June policy meeting showed a heightened sense of concern over financial stability as households struggle with record levels of debt.

Yesterday as well, the Dollar hit a three-week high against its peers, after hawkish comments from NY Federal Reserve President William Dudley saying that US inflation should rise alongside wages and supporting expectations for the Fed to keep raising interest rates. The Dollar was lifted after Dudley said that tightening in the labor market should help drive up inflation. That helped offset concerns among some investors that stubbornly low inflation could prevent the Fed from raising interest rates further this year. However, Chicago Fed President Charles Evans said on Monday it may be worthwhile for the US Central Bank to wait until year-end to decide whether to raise interest rates again.

Since Monday as well, the British Pound edged down against the US Dollar, with demand for the currency weakened by uncertainty over domestic politics and over Britain’s economic future, as formal Brexit negotiations got under way. Britain and the EU’s chief negotiators began talks by stressing the need to quickly tackle uncertainties in the process and their constructive attitude to reach a deal that is good for all.