Dynamic Business Logo
Home Button
Bookmark Button

Aussie dollar fails to reach parity with US dollar after hitting US 99.94cents

The Aussie dollar has failed to reach parity with the US dollar after coming as close as US 99.94 cents yesterday as profit takers moved into the market ahead of the release of US economic data tonight Australian time.

Aussie DollarThe Australian dollar had was trading at historic highs not seen since the Australian currency was floated in 1983 of US99.94c yesterday as concerns mounted the United States Federal Reserve would announce plans to reflate the currency through 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.

Australia’s currency started its most recent surge on the back of ABS Labour Force Statistics data released last Thursday that showed the Australian unemployment rate to be steady at 5.1 percent but with an additional 49,500 full time positions created in the last month, taking the Aussie dollar through the 98 cent barrier to US98.45 cents last week.

Continued weakness in the US economy has seen a flight away from US currency with many economists predicting the Australian dollar would reach parity with the US dollar today after trading as high as US 99.94 cents yesterday. This prediction hasn’t eventuated as profit takers moved into the market pushing the Aussie dollar back below US99 cents at lunchtime.

United States economic data released overnight showing poor jobs growth has continued to bolster the case for a weakening US dollar, however a speech by US Federal Reserve Chairman Ben Bernanke titled ”Monetary Policy Objectives and Tools in a Low-Inflation Environment” due to be delivered Friday US time is preventing the market from breaking through the parity psychological barrier as traders seek firm indications from the Fed Chairman as to the central bank’s quantitative easing plans for the US dollar.

What do you think?

    Be the first to comment

Add a new comment

David Olsen

David Olsen

An undercover economist and a not so undercover geek. Politics, business and psychology nerd and anti-bandwagon jumper. Can be found on Twitter: <a href="http://www.twitter.com/DDsD">David Olsen - DDsD</a>

View all posts