Aussie Rallies on Hopes for QE3

The Australian dollar rose against most of its major peers as negative macroeconomic data from the United States spurred speculations that the Federal Reserve would stimulate the slowing economy.

Many Forex market participants were hoping that the Fed would refer to quantitative easing this month. That did not come to pass. Traders were disappointed, but then started to speculate that QE3 was postponed, not rejected. Indeed the recent data from the USA suggest that the economy requires some stimulative measures.

Lee Wai Tuck, a currency strategist at Forecast Pte, said:

There are some prospects the Fed will embark on QE3 somewhere in the later part of the year. There will still be interest to buy the Aussie and the kiwi on dips, but they’re still a sell on rallies.

AUD/USD climbed from 1.0038 to 1.0062 and AUD/JPY advanced from 80.56 to 80.94. EUR/AUD went down from 1.2490 to 1.2484 after rising to 1.2525.

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