Aussie Big Winner Again
The Australian dollar has been a recent big winner in forex markets globally. The Aussie dollar has experienced an astounding 32% rally so far this year and some forex traders and currency experts are predicting the Aussie dollar will reach parity with the US dollar for the first time since 1982. Demand for the Aussie has climbed as investors remain concerned about the status of the US dollar as a reserve currency and predictions that US interest rates will remain at record lows. Jonathan Xiong of Mellon Capital in San Francisco stated, “We like the Australian dollar and that’s one of the recovery plays we have on. He further stated that parity is “a possibility, but we don’t make forecasts on whether it will go to parity or a particular rate.”
US Dollar Pulls Back From 14 Month Low
The US dollar pulled back from a 14 month low against the euro as disappointing third quarter results from General Electric and Bank of America triggered a slight rise in risk aversion. Amelia Bourdeau of UBS AG stated, “The rally in the dollar we see today is profit taking going into the weekend. We think risk seeking will continue, although it’s getting choppy.” The dollar vs. euro rate rose 0.4% to $1.4891 after hitting a 14 month low of $1.4968 and against the yen the dollar advanced 0.3% to 90.86 yen. Bourdeau also said she believes that the US dollar’s decline will resume as currency traders and investors seek higher yielding assets.
Aussie Second Best Performing Currency
The Aussie dollar is the second best performing currency after the S African Rand. The Australian economy expanded after one single quarter of economic contraction. Currency experts believe the growing Australian economy will make the Aussie dollar even more attractive against the US dollar which is troubled by massive deficits and is also pressured by the amount of debt the U.S. Treasury will issue. Australian growth has been fueled by a A$20 billion ($18 billion) in government handouts to consumers and China’s demand for the country’s iron ore.
