Australian Dollar Soars On Weak Us Currency
July 13th, 2011
THE Australian dollar has started the trading day over one US cent higher, benefiting from a weakening US currency and strong Chinese growth figures.
At 7am (AEST) today, the dollar was trading at 107.57 US cents, up from 106.39 US cents yesterday afternoon.
Since 5pm yesterday, the local unit traded between 106.28 US cents and 107.78 US cents.
Overnight, US Federal Reserve Chairman Ben Bernanke said the central bank was open to the idea of applying another round of quantitative easing (QE), or buying up of Treasury bonds, if economic conditions worsen.
This caused the US dollar to weaken against all major currencies and gave the Australian dollar a boost, said Kathy Lien, director of currency research at GFT Forex.
Healthy Chinese domestic gross product (GDP) figures, released on Wednesday, also strengthened the Australian dollar, Ms Lien said.
"That made everyone feel a little better about the growth scenario in China," she said.
"Those two dynamics (Bernanke's comments and the Chinese data) have congealed together to push all of the commodity currencies higher."
Ms Lien said there was speculation that the Bank of Japan (BOJ) may intervene in foreign exchange markets on Thursday, to keep a lid on its soaring local currency.
"If there is a BOJ intervention, it would drive many of the currencies higher in Asia, including the Aussie/yen (cross rate).
"That's a risk we have overnight ... and it's certainly a very large one."