As demand for riskier assets rises the Australian Dollar has prospered against many of its major rivals.
The ‘Aussie’ has been supported by expectations for low volatility and a rally in stocks bolstered demand for higher yielding riskier assets.
Against the US Dollar the currency advanced to its best level in over a month, and some economists are forecasting that the AUD could continue its upward momentum to reach parity with the Greenback by 2015.
Bets that the Reserve Bank of Australia will begin to raise interest rates in the fourth-quarter of 2014 and again at the start of next year have also increased sentiment towards the Australian Dollar.
An upward cycle of interest rate rises will generate fresh support for the currency and is likely to see it hit parity against the US Dollar next year.
A report released by Credit Suisse Group AG also supported demand for the ‘Aussie’. The data showed that traders anticipate a rate hike by 11 basis points over the coming year.
The forecast was unchanged despite the Australian government unveiling a budget that could see sharp budget cuts and job losses.
“Clearly, we’ve had a pretty good couple of days in terms of global risk appetite, and you wouldn’t be looking at ‘Aussie’ and ‘Kiwi’ if you didn’t have a pretty positive vibe in Asia. If you were looking at investing in the ‘Aussie’ and its finding itself to be quite stable and pleasingly dull, then you’re a lot less worried about it suddenly cracking through 90 US cents,”
Against the Pound the ‘Aussie’ was firmer but could soften as the session progresses.
The Bank of England is set to give its quarterly inflation report and the UK’s latest unemployment data is due for release.
Sterling is expected to strengthen as economists expect the BoE to raise its growth forecasts and the unemployment rate is expected to fall to its lowest level in more than five years.
Australian Dollar (AUD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Australian Dollar,
,US Dollar,0.9398 ,
Australian Dollar,,Pound Sterling,0.5570 ,
Australian Dollar,,Euro,0.6846 ,
Australian Dollar,,New Zealand Dollar,1.0869 ,
US Dollar,, Australian Dollar ,1.0641 ,
Pound Sterling,, Australian Dollar ,1.7950 ,
Euro,, Australian Dollar ,1.4599 ,
New Zealand Dollar,, Australian Dollar ,0.9208 ,
[/table]
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