Aussie Rises During Abbreviated Trading

The Australian dollar rallied today even as central bank’s officials continued to complain about the excessive strength of the currency. The Aussie was down during two previous trading sessions. Today’s trading may be choppy because of light volume due to a holiday in the United States.

Philip Lowe, Reserve Bank of Australia Deputy Governor, was speaking at the Annual Australian Business Economists Conference dinner in Sydney today. He said regarding the strength of the currency:

In terms of the exchange rate, the RBA has been saying for a while now that a lower value of the Australian dollar would be helpful from an overall macroeconomic perspective. If the exchange rate is to play its important stabilising role, it needs to go down when the terms of trade and investment are declining, just as it went up when the terms of trade and investment were rising. To date, as we expected, we have seen some adjustment, but if our assessment of the fundamentals is correct we would expect to see more in time.

Market analysts have expected the Australian dollar to fall after the comments, but the Aussie surprised them rallying instead. While the currency retreated closer to the opening level versus the yen as of now, it kept gains against the US dollar and the euro.

AUD/USD advanced from 0.8533 to 0.8541 as of 1:55 GMT today, reaching the high of 0.8562 intraday. EUR/AUD dropped from 1.4620 to 1.4600. AUD/JPY traded at 100.58 following the rally from 100.63 to 100.87

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