Monday, 5 September 2011

Third Week of Gains for Aussie, Can Rally Be Sustained?

The Australian dollar recovered during most of the week, the publication of the third week of gains against the U.S. dollar the longest run of weekly gains since April, but at the end of the week became unfavorable basis for the currency.

The Australian dollar rose on speculation that the Reserve Bank of Australia cut interest rates. Interest rate futures indicate only 20 percent probability that RBA Governor Glenn Stevens reduced the bank's main rate on 6 September. Most traders believe that is 80 percent chance the central bank kept key rates unchanged this month. Australia cash rate target rate is considered larger loans among developed nations.

Aussie's demonstration seemed unstoppable until the U.S. non-farm payrolls came out, sending markets into chaos and destruction of risk appetite to go out even worse than the most pessimistic forecasts. The Australian currency managed to stay above the opening this week, but erased the three days of gains against the dollar and the yen. Worse, it appears that the currency associated with the growth may continue to fall next week as the style of the risk aversion of thought is to return to the markets.

AUD/USD opened at 1.0583, jumped to 1.0764 and closed at 1.0641 this week. EUR/AUD slid from 1.3692 to 1.3346. AUD/JPY jumped from 81.23 to 82.81 during this week before closing at 81.71.

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