Australian dollar likely to weaken a little further in short term, says Commerzbank

The Australian dollar is expected to weaken a little further in the short term, particularly owing to the destruction caused by the recent bushfires, according to the latest research report from Commerzbank.

The Australian dollar remains under pressure despite the recently quite positive economic development. The rise in employment in December was unexpectedly high and the unemployment rate recorded a surprise fall.

However, in the end that only supported the aussie briefly. As a result of heightened risk aversion on the markets as well as continued dampened business sentiment as illustrated by the declining PMI the currency had to retrace its gains again intraday yesterday.

"Despite the positive labour market report we too stick to our view that the Australian central bank will cut its key rate again in the near future in view of the downside risks for the growth outlook, in particular as a result of the continued bush fires," the report further commented.