The Australian dollar has hit US99.37c this morning as concerns the United States Federal Reserve will reflate the currency as soon as November continue to weaken the US dollar.
Expectations are for the Aussie dollar to continue to appreciate, with this morning’s increase attributed concerns the US Federal Reserve will engage in another round of quantitative easing as soon as November (keeping interest rates at zero, and ‘printing more money’ by buying US federal bonds) to bolster domestic demand, as a result there continues to be a flight of US currency holders away from the US to ’safe’ currencies such as Australia which will better hold their value.
Dale Gillham, Chief Analyst at Wealth Within expects the Australian Dollar to rise as high as US$1.20 within the next 12 months.
“The main reason is that the US economy continues to remain in bad shape, although that said there are some encouraging signs, but not enough to allay fears that their economy could experience a double dip recession. In response to this, the US treasury are continuing to print money in an attempt to stimulate the economy and avoid the prospect of a further recession.
“The same cannot be said for Australia as commodity prices remain strong, employment figures are good, and whilst the US continues to print money the Australian dollar continues to get stronger.” he said.
The Aussie dollar is currently trading at US99.20c, and is modestly higher to steady against a broad basket of currencies.
