Demand for Higher-Yielding Assets Pushes Aussie Up

The Australian dollar advanced today, supported by the unexpectedly high growth of the U.S. retail sales, which spurred speculation about the rising demand for the higher-yielding assets.

The U.S. retail sales jumped 1.6 percent the last month. As the demand for the higher-yielding assets goes up, the speculative investors are attracted to Australia with its interest rates are as high as 4.25, compared to the benchmark rates in Japan (0.1 percent) and in the U.S. (0–0.25%). The Australian currency also gained after the report that consumer confidence in Australia has surged to its highest level in almost three years.

Analysts say that the consumer sentiment, despite its recent slight drop, remains considerably high. So, the high rates have not begun to influence the confidence of the consumers in Australia for now.

AUD/USD surged today as high as 0.9347 as of 19:30 GMT after it opened at 0.9290. AUD/JPY rose to about 87.07 from the opening level of 86.57. EUR/AUD traded near 1.4602.

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