THE Australian dollar has briefly shot up to a four-week high after the US central bank’s decision to keep its interest rate unchanged, before falling away.
At 0700 AEST on Friday, the currency was trading at 71.67 US cents, down from 71.85 cents on Thursday.
Early on Friday morning, it peaked at 72.76 US cents, its highest level since August 24, before moving lower.
Fed chair Janet Yellen citied worries about the slowdown in China and its impact on the US economy as the reason why there wasn’t a rate rise.
Dr Yellen added that the US economy continues to grow moderately and that a rate increase could still take place before the end of the year.
National Australia Bank currency strategist Emma Lawson said the Australian dollar initially rose against a weaker US dollar but then fell when Dr Yellen gave her post-meeting press conference. “She, basically, provided a guide to the fact that this was a postponement of a hike, not a cancellation,” Ms Lawson said. “The time arrived but the Fed couldn’t bring itself to raise rates for the first time since the financial crisis.” The futures market is still fully pricing that the Fed will raise its rate by the end of the year.
BK Asset Management managing director Kathy Lien said the Fed’s outlook for the economy has basically not changed.
“They still believe the US economy is performing,” Ms Lien said. “They want to see further improvement in the labour market and, hopefully, inflation before raising interest rates.” The key event for markets on Friday will be testimony by Reserve Bank of Australia governor Glenn Stevens to the House of Representatives Economics Committee, at Parliament House in Canberra.
CURRENCY SNAPSHOT AT 0700 AEST ON FRIDAY
One Australian dollar buys:
* 71.67 US cents, from 71.85 cents on Thursday
* 85.99 Japanese yen, from 86.82 yen
* 62.70 euro cents, from 63.57 euro cents
* 112.94 New Zealand cents, from 113.14 NZ cents
* 45.98 British pence, from 46.35 pence
No comments:
Post a Comment