Australian dollar strengthens as France's loss is the Aussie's gain, RBA interest rate stance also helps

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Category: Exchange Rates

Published on Tuesday, 20 November 2012 11:06

Written by Will Peters

The Australian dollar (Currency:AUD) continues to do well against its UK counterpart and other key currencies, despite this morning's lull that comes in line with softer commodity prices.

This morning we see the pound to Australian dollar exchange rate is 0.1 pct higher on last night's closing level at 1.5926.

The Australian dollar to US dollar rate is 0.13 pct in the red at 1.0398.

"The Australian dollar maintained gain from yesterday after France lost its top credit grade from Moody’s Investors Service, spurring speculation the South Pacific nation’s highest-rated debt will draw more investors," says Richard Driver at Caxton FX.

Meanwhile, Australia’s Central Bank Governor Glenn Stevens said it was practical to keep the nation’s benchmark interest rate unchanged for the moment, as policy makers monitor the impact of the previous reductions on the economy. 

Elsewhere, the New Zealand dollar has benefitted from optimism in Europe, but Frances downgrade and fears in the US have seen risk appetite stall.

The pound has gained some lost ground on the kiwi dollar this morning, as the French credit ratings downgrade by Moody’s weighed on risk appetite.

"Risk appetite should return after the Euro Group meetings announce another tranche of Greek aid, but this will be unlikely to hang around, as Ben Bernanke is likely to remind the market this afternoon of the dangers of the looming “fiscal cliff”. This should keep the pound supported today," says Driver.