The Australian dollar is trading around the .7350 cents range as the US dollar continued to gain support.
“Today is one of those days where you look at a two-thirds of a per cent fall in the Australian dollar and say, that’s not too bad,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
“I say that because while the Aussie dollar is still down near 0.7350 cents, it has performed fairly well compared to the Euro, which is down 1.15% and was substantially lower overnight at a new 14 year low of 1.0364,” he added.
The Aussie has also done relatively well compared to the Japanese Yen which weakened to the extent that USDJPY traded to a high of 118.66 at one point overnight.
According to McKenna, one of the key reasons the Euro and the Yen are under pressure is the reality that the US Fed decision and reverberations from it are that forex traders are betting the long-awaited policy divergence is not only here but also likely to be broader than many were expecting.
The European Central Bank (ECB) is still undertaking its QE program, and the Bank of Japan (BoJ) has its foot on long bonds in Japan so they don’t rise and keep pace with the sell-off in US Treasuries.
McKenna noted that Australia is currently viewed as being in a slightly different spot.
“Certainly, the RBA is not in any type of hurry to raise rates. And some organisations – including Credit Suisse this week – believe that the RBA may even have to drop rates once again,” he said.
He added, “But for the most part the rally in metals, the better data out of China, the sell-off in Australian rates markets, and the leakage of Trumponomics reflation effects into the global economy are still viewed in many investor circles as being net positive for the Aussie dollar.”
Back in 2007, AxiTrader was founded on a simple idea: to be the broker we’d want to trade with. We’ve since grown to become one of Australia’s largest and leading Forex brokers. Investing in over-the-counter derivatives carries significant risks and is not suitable for all investors. You could lose substantially more than your initial investment.
This post has been seen 91 times.