The Australian dollar is trading at a two year high against the US dollar, hitting US96.08c during early trade this morning.
The Australian dollar hasn’t traded this high since July 2008 where it was trading at US 97.92c at the peak of the last economic cycle.
Expectations are for the Aussie dollar to continue to appreciate, with this morning’s increase attributed to US durable goods data released overnight which showed new orders for long-lasting US manufactured goods fell more than expected in August to post their largest decline in a year. The poor showing for United States durable goods performance is likely to result in the US Federal Reserve engaging in an additional round of quantitative easing (keeping interest rates at zero, and ‘printing more money’) to bolster domestic demand, as a result there was a flight of currency from the US to ‘safe’ currencies such as Australia and New Zealand which are believed to better hold their value.
Westpac New Zealand senior market strategist Imre Speizer expects the Australian dollar to hit US98c in upcoming sessions according to The Australian.
For Australian exporters, the appreciation of the Australian dollar is bad news if you are dealing in US$, however for exporters to Asia the Australian dollar is steady at 80.9 yen and similarly steady against other Asian currencies.
