The ‘Aussie’ was able to achieve a 7-week high against the US Dollar yesterday after Australia’s economic outlook improved and a report revealed an expansion in Chinese manufacturing.
The Australian Dollar exchange rate was trading in the region of 1.0434 against the US Dollar as of 10:42 am GMT
The Down Under Dollar continues to trade in the region of $1.042+ despite risk aversion dominating the marketplace as a result of worrying developments in the Eurozone.
An increase in the Australian Conference Board Leading Index, a measure of short to-mid term growth, lent the ‘Aussie’ support and trimmed the odds of the Reserve Bank of Australia cutting interest rates within the next few months.
In the minutes of the RBA’s last policy meeting, which were released earlier this week, the central bank asserted: ‘interest-sensitive parts of the economy continued to show signs of responding to these low rates. It was appropriate to hold rates steady, and to assess further developments.’
As analyst Takuya Kawabata comments: ‘Expectations for an imminent rate cut by the RBA have been pared back. Even as risks around Europe linger, the Australian Dollar has been supported by positive domestic factors. There don’t seem to be serious concerns in the market yet that the crisis in Cyprus will spread to other nations such as Italy and Spain.’
Meanwhile, Malcolm Edey – Assistant Governor of the RBA – downplayed the risks to the Australian financial industry.
Edey was quoted as saying: ‘To the extent that any generalised financial overhang exists, it is less likely to be a problem here than elsewhere. The combination of regulatory and private sector responses around the world seems likely to result in reduced financial risk-taking in the foreseeable future.’
In other South Pacific news, the New Zealand Dollar was trading in the region of a two-week high against it US counterpart after a report revealed an increase in national job advertisements.
Comments are closed.