2020.05.2107:21:00UTC+00Australian Dollar Drops As RBA Lowe Signals Further Easing

The Australian dollar fell against its major counterparts in the Asian session on Thursday, after Reserve Bank of Australia's governor Philip Lowe hinted at the likelihood of further easing to counter the economic impact of the Covid Crisis.

Speaking at a Finsia webinar, the central bank chief said that the RBA is ready to scale up its asset purchases to support the economy.

Lowe cautioned that the future remains unusually uncertain and confidence is "incredibly fragile."

The negative interest rates are "extraordinarily unlikely," Lowe said, adding that the "costs exceed the benefits."

Australia's private sector remained in a deep contraction in May as the impact of the coronavirus, or Covid-19, on the economy remained severe, according to a survey data from IHS Markit.

The Commonwealth Bank flash composite output index rose to 26.4 in May from 21.7 in April. A score below 50 indicates contraction.

The aussie dropped to 71.00 against the yen and 0.6549 against the greenback, from its early highs of 70.49 and 0.6598, respectively. The aussie is seen finding support around 65.00 against the yen and 0.60 against the greenback.

The Australian currency edged down to 1.6733 against the euro and 0.9128 against the loonie, off its early highs of 1.6629 and 0.9173, respectively. The aussie may locate support around 1.80 against the euro and 0.88 against the loonie.

The aussie weakened to an 8-day low of 1.0703 against the kiwi and held steady thereafter. At Wednesday's close, the pair was worth 1.0731.

Looking ahead, PMI reports from major European economies are due in the European session.

U.S. weekly jobless claims for the week ended May 16, existing home sales and leading index for April will be featured in the New York session.