The Australian Dollar edged higher against the Pound on Monday morning and strengthened to a three-week high against the US Dollar after investors increased their expectations that the Reserve Bank of Australia will signal that it is in no hurry to cut interest rates.
The rise marks the fourth consecutive day of gains for the Australian currency after traders pared their bets for further falls. Expectations that the RBA will refrain from making a further interest rate cut have been spurred on by the stabilization of the Chinese economy and an increasing demand for Australian commodity exports.
As a result traders are pricing in at just a 12% chance that the Central Bank will choose to cut rates at the September policy meeting. Tuesday sees the release of the minutes for August’s policy meeting which saw the bank choose to cut rates to the record low level of 2.50%.
Adam Boyton, chief economist at Deutsche Bank for Australia, said there are good reasons to be optimistic about the Australian economy, and the RBA is probably done cutting interest rates. He said that a stronger world economy and signs of stabilization in the job market were reasons to be increasingly upbeat about the Australian economy.
“We think the risk over coming months is that the Bank is surprised a little to the upside by the economy. For that reason we expect no further rate cuts,” Mr. Boyton said. “This marks the first time in two years that we have the bank on hold,” he added.
Also giving support to the currency is the rise in the value of metals. The country’s biggest export, iron ore has seen its value climb to its highest-level in five months.
The currency could lose ground on Wednesday when the US Federal Reserve releases the minutes of its last policy meeting. Traders are hoping the report will offer some clarity as to when the Fed will begin tapering its monetary stimulus programme.
Current Exchange Australian Dollar (AUD) Rates
The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9208
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6907
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5886
The Australian Dollar/ New Zealand Dollar Exchange Rate is currently in the region of: 1.1304
The US Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0859
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4478
The Pound Sterling /Australian Dollar Exchange Rate is currently in the region of: 1.6988
The New Zealand Dollar/Australian Dollar Exchange Rate is currently in the region of: 0.8845
Correct as of 09:40 am GMT
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