RBA comments send $A below 90 US cents Christmas has come early for the Reserve Bank after comments from Glenn Stevens caused the Australian dollar to fall below 90 US cents. The currency hit a three-and-a-half month low of 89.14 US cents in the early hours of Friday morning - following the publication of comments by Mr Stevens about the persistently high level of the Australian dollar. He said he would prefer a lower dollar over lower interest rates as a mechanism to spur the economy, and with Australia's terms of trade falling he expected the currency to continue to fall to its natural level. The currency had already been falling against a stronger US dollar, but Mr Stevens' comments sent the Australian dollar "crashing down," BK Asset Management managing director Kathy Lien said. "With limited capacity to lower interest rates, Stevens' comments basically amount to verbal intervention and he is hoping that tapering by the (US) Fed will help drive the currency to his targeted rate," Ms Lien said. The RBA is clearly dovish and want to see the currency lower. As such, we not only expect the AUD/USD to break below its three-year low of 88.46 US cents but we expect its slide to extend down to 85 cents. That would also benefit many Australian businesses who have had higher costs and weaker global competitiveness as a result of the stronger dollar. JP Morgan interest rate strategist Sally Auld also said Mr Stevens' comments could force the dollar lower. "The governor has provided a target for the AUD/USD on the downside," Ms Auld said. This is an important development and while the governor notes that it is difficult to suggest a target with any precision, it should be taken as a strong signal that the move from 96.50 US cents to 90.50 isn't yet sufficient for policy makers. While the market might not gravitate towards the 85 US cent level immediately, it nonetheless provides some clarity around the broad level of the AUD/USD that might be deemed appropriate by policy makers, thus providing the market with confidence that short Australian dollar positions are still the correct trade.