The Australian dollar retreated today after the yesterday’s surge on the speculation the currency gained to much and to fast to keep the gains.
The Australian dollar, as well as other currencies with high yield, advanced yesterday as the European leaders described the planned measures to rescue the European Union from the debt crisis. The Aussie, as the currency nicknamed, reached the highest level in almost two months against the US dollar and the yen. Yet today the currency started the trading session with decline.
Is this decline the usual correction after a strong rally or a confirmation of the bearish tendency that has started earlier? Both options look possible. The bearish factors that were mentioned earlier, like the prospects for an interest rate cut, are still in place as well as worries about the slowing economic growth in China. Yet the positive sentiment about the developments in Europe already has showed the ability to push riskier currencies higher even when fundamentals don’t warrant such moves. Currently the sentiment is definitely positive and may support the Aussie in its move to the upside.
AUD/USD fell from 1.0729 to 1.0672 as of 4:34 GMT today after yesterday it jumped from 1.0398 to close at 1.0729 and reached 1.0752 intraday — the highest rate since September 1. EUR/AUD advanced from 1.3219 to 1.3271 today, following yesterday’s drop from 1.3369 to 1.3218. AUD/JPY was down from 81.47 to 80.98 on the current trading session, while on the previous session the currency pair was up from 79.18 to 81.48.
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