The Australian dollar turned down a bit against the US dollar and the Japanese yen today. It is not surprising considering how huge yesterday’s rally was. The Aussie continued its rise versus the euro.
Commodity currencies were rallying yesterday as US politicians compiled a bill that will prevent an automatic tax hikes and spending reductions that could push the US economy into a recession. The Standard & Poor’s GSCI Index of 24 commodities gained 0.9 percent, boosting currencies tied to the performance of raw material (and the Australian dollar is one of such currencies). The S&P 500 Index of shares jumped as much as 2.5 percent.
The good news resulted in a really impressive rally of the Australian currency and some correction could be expected. And for now nothing suggests that the current retreat is anything but indeed just a small correction after the Aussie rose too high too fast.
AUD/USD fell from 1.0503 to 1.0489 as of 4:56 GMT today. AUD/JPY dropped from 91.73 (the highest level since September 2008) to 91.49. Meanwhile, EUR/AUD declined from 1.2550 to 1.2521.
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