The Australian Dollar has strengthened against its US counterpart but has made losses against the Japanese Yen after the Bank of Japan announced its plans to boost the Asian nation’s economy.
The Japanese Bank’s plans for expanding monetary stimulus boosted the prospect for global growth and raised the demand for riskier commodity based currencies. The announcement created a lot of volatility on the currency market with most of the major currencies weakening against the Yen.
“For global growth it’s a good thing to have some expansive monetary policy in Japan,” said Derek Mumford, a Sydney-based director at a currency risk- management company. “It’s supportive of the Aussie dollar as it’s attempting to speed up growth and get inflation in the Japanese economy.”
The ‘Aussie’ rose by 0.5% to trade at 1.0568 against the US Dollar and also posted gains against the Euro.
“We expect the AUD/USD to trade in a relatively symmetrical and narrow range for the rest of the quarter reflecting countervailing forces before grinding lower over the remainder of the year,” said strategists at Barclays.
Demand for the Australian currency could be dampened tomorrow however, due to the Australian Bureau of Statistics releasing the nation’s latest inflation data. Economists are predicting that if the figure is high then interest rates could be cut in response.
The Reserve Bank of Australia has an inflation target of two to three per cent so figure higher than that could cause the Bank to cut interest rates at its February 5th policy meeting. Such a move will lead to a weakening of the currency.
Financial markets are pricing in about a 38 per cent chance of another quarter-point reduction – adding to 1.75 percentage points of cuts since November 2011.
The Australian Dollar to Pound exchange rate is currently trading at 0.6660
The Australian Dollar to US Dollar exchange rate is currently trading at 1.0566
The Australian Dollar to Euro exchange rate is currently trading at 0.7917
The Australian Dollar to New Zealand Dollar exchange rate is currently trading at 1.2556
The Australian Dollar to Canadian Dollar exchange rate is currently trading at 1.0487
The Australian Dollar to Swiss Franc exchange rate is currently trading at 0.9821
The Australian Dollar to South African Rand exchange rate is currently trading at 9.343
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