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Australian Dollar | Latest Australian Dollar Exchange Rate News
Australian dollar, New Zealand dollar: Currencies gain vs the Pound and US dollar as 'carry trade' demand is boosted
- Details
- Category: Australian Dollar
- Published on Thursday, 26 January 2012 10:14
- Written by Rob Samson
Despite a slightly more dovish Reserve Bank of New Zealand interest rate outlook, the New Zealand dollar gained more ground on the Fed news.
The pound Australian dollar exchange rate is 0.49% lower at 1.4711.
The pound New Zealand dollar exchange rate is 0.36% lower at 1.9100.
This morning exchange rate markets are higher, as are commodity prices, these are perfect conditions for the Australian dollar to register gains against the safer US dollar and British Pound.
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Analyst Richard Driver at Caxton Fx points out that demand for the carry trade has been boosted once more.
"Investors commonly pursue the carry trade; this is where they borrow at low interest rates close to zero (as we are seeing with the dollar in the US), and park those funds in a higher yielding currency such as the Australian dollar (which currently offers a 4.25% interest rate). It is little surprise that the Fed’s announcement of “low rates for longer” gave a boost to risky assets," says Driver.
Accordingly, sterling stooped to new record lows against the Australian dollar down near 1.4750 and this pair is likely to remain under pressure.
Despite a slightly more dovish Reserve Bank of New Zealand interest rate outlook, the New Zealand dollar gained more ground on the Fed news.
"The RBNZ kept interest rates on hold at 2.50% last night as expected. However, the rhetoric changed from “on hold for now” to “on hold,” suggesting that the RBNZ is happy with the current rate and not looking to hike any time soon. Governor Bollard noted that the stronger NZ dollar is hurting kiwi exports, which could well deter the market from sending the dollar too much higher," says Driver.
The GBPNZD pair is trading at 1.9150 this morning and a test of the 1.90 benchmark seems likely before long.
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