Back
25 Nov 2013
AUD/USD: Talk won't keep the Aussie dollar down for long
FXstreet.com (London) - AUD/USD has steadily fallen down to USD0.9138, down 0.49 percent on a successful jawboning of the currency by Reserve Bank of Australia governor Glenn Stevens. But however welcome the respite is for the Australian dollar, it is a temporary lull as currency continues to be an attractive source of yield compared to its G10 peers.
Stevens said last week that he is “open-minded” about the possibility of intervening in the currency as Aussie dollar strength puts pressure on demand for Australian commodity exports. The resurgence of the US dollar has also played into Stevens’ favour on heightened bets that the Federal Reserve will move to taper its USD85bn-a-month asset purchase programme in December. However, in the medium-to-longer term, Aussie dollar strength is not something that can be talked away.
The RBA base rate currently stands at 2.5 percent, following 2.25 percent of cuts since November 2011. And with many major central hanks holding rates to near zero, the Australian dollar is an attractive source of yield, with up to 34 central banks holding the currency in their reserves.
High demand has also helped Australian bonds soar against other majors. 10-year Australian government bonds currently yield 4.30 percent versus 2.67 percent for US Treasury bills.
Stevens said last week that he is “open-minded” about the possibility of intervening in the currency as Aussie dollar strength puts pressure on demand for Australian commodity exports. The resurgence of the US dollar has also played into Stevens’ favour on heightened bets that the Federal Reserve will move to taper its USD85bn-a-month asset purchase programme in December. However, in the medium-to-longer term, Aussie dollar strength is not something that can be talked away.
The RBA base rate currently stands at 2.5 percent, following 2.25 percent of cuts since November 2011. And with many major central hanks holding rates to near zero, the Australian dollar is an attractive source of yield, with up to 34 central banks holding the currency in their reserves.
High demand has also helped Australian bonds soar against other majors. 10-year Australian government bonds currently yield 4.30 percent versus 2.67 percent for US Treasury bills.