The Australian dollar halted its two-day drop today but has hard time carving out gains as domestic fundamentals are still dragging the currency down. The Aussie was heading to a weekly loss versus its US counterpart.
The Australian dollar was not able to join the rally of other higher-yielding currencies as domestic factors remained negative for the currency. The Aussie’s attractiveness was hurt by poor Australia’s economic indicators and comments from Glenn Stevens, the Reserve Bank of Australia Governor, who expressed unhappiness with the current exchange rate and desire to see the currency weaker.
It is not only Australia’s policy makers who may be unhappy with the strength of the currency. Appreciation is also has a negative impact on the currency’s attractiveness to carry traders. While volatility was low recently, encouraging carry trades, the rally of the Australian dollar was eating away profits of investors who used the Aussie in their carry trading.
AUD/USD ticked up a little from 0.9346 to 0.9356, while AUD/JPY traded at 95.49 as of 16:08 GMT today, near its opening level of 95.50. EUR/AUD slipped from 1.4559 to 1.4534.
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