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Australian Dollar Down After Chinese Comments

June 29, 2009 at 12:22 by Jan Baros

Australian dollarThe Australian dollar, often referred as the Aussie, fell for the first time in 5 days against the U.S. dollar and other currencies after China’s comments indicating that the greenback will continue to be the main world reserve currency, damping demand for the Australian dollar high-yielding profile.

The Australian dollar had a significant rally last week pushed by a risk aversion decrease, several positive days in stock markets and a rise in commodities prices, being the latter of the most important exports for the nation’s economy. After 5 days climbing against the greenback, China’s comments reaffirming the greenback’s position finally pushed the Aussie down in a rather corrective movement, since even with a bearish pattern formed by a less attractive sentiment towards the Aussie, it still managed to post just a slight fall against the North American currency, which is gaining sharply against other currencies like the euro.

Most of economists agree that there isn’t a sustainable and short-term option to substitute the U.S. dollar as the main world currency, which brought traders to purchase assets in dollar, damping demand for the Aussie, nevertheless, the Aussie has been really bullish during the past week and there isn’t any reason to make it fall considerably, being today’s movement a rather corrective one.

AUD/USD traded at 0.8041 as of 11:20 GMT from 0.8075 when the session opened yesterday, after bottoming at 0.7985, the Aussie keeps strong and has already started a rebound pattern.

If you have any questions, comments or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

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