The Australian dollar took another hefty hit overnight, falling to a fresh six-year low as Fed chair Janet Yellen signalled the US central bank could lift interest rates as early as September. Adding to pressure for commodity currencies, Canada cut its benchmark interest rate for the second time this year to shield the country’s economy from the impact of a dive in the oil price hurt.
The Canadian rate cut, which took the market a bit by surprise as it was seen as only a 50-50 chance, took the country’s dollar to a six-year low of 77.17 US cents. The Aussie tumbled in the wake of the Loonie’s fall, and later extended its drop when Ms Yellen in a parliamentary testimony reinforced market expectations for a US interest rate hike, possibly as soon as September.
The Aussie fell as low as 73.54 US cents overnight, a level it hasn’t traded at since May 2009, before recovering slightly to fetch 73.79 US cents in early trade on Thursday. The Federal Reserve chair told Congress that the Fed remains poised to raise interest rates this year, as labour markets were steadily improving, while turmoil in Greece or Chinese equity markets was unlikely to knock the US economy off track.