Traders dump the Aussie and Kiwi dollars to favour lower yielding
currencies.
A tumble in high yielding currencies saw the Aussie and Kiwi dollars
drop yesterday, with the Australian
dollar hitting a five month low against the pound. The yen rose broadly,
hitting a two year high against the Kiwi dollar, as the higher yielding
currencies nose dived, forcing margin traders to limit
losses by selling their holdings.
With the worlds central banks focussed on the threat of runaway
inflation some analysts are suggesting that the Reserve Bank of
Australia will not have completely ruled out a rate hike this year
despite indications that the Aussie economy is slowly running out of
steam.
Recent US Dollar strength has materialized as the Fed has begun to make
noises about inflation and the market presumes a rate hike later this
year. Similarly, strong warnings from the Bank of England about the need
to combat inflation has given Sterling a bit of breathing room and has
pushed up against the Aussie. Australian / US Dollars trades at 1.15 and GB Pounds /Australian
Dollar at
2.18. We expect to see some Aussie dollar strength in the near term as
traders disregard the Fed’s warnings about a rate hike.
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