Australian Dollar Gains as Fed Considers Dropping of Monetary Easing

The Australian dollar rose, erasing its previous losses, as stocks gained and prices for raw materials increased as market sentiment gradually turns to risk appetite and on the speculation that the Federal Reserve may reduce stimulus for the US economy.
James Bullard, President of the Federal Reserve Bank of St. Louis, thought that it may be time to drop the monetary easing:

With numerous monetary policy actions still on the table, and others still affecting the economy with a lag, it may be especially difficult to remove policy accommodation at the appropriate pace and at the appropriate time. One may want to approach such a situation with caution.

Bullard considered the US economy is recovering fast enough to exist without excessive stimulus. Fed Chairman Ben Bernanke wasn’t so optimistic about the recovery of the US economy and expressed his view:

Consumer spending is not recovered, it’s still quite weak relative to where it was before the crisis. In terms of debt and consumption and so on we’re still way low relative to the patterns before.

Crude oil gained on concerns about disruption of supplies from Iran. Metals, including gold, silver, platinum, and copper also advanced. The Aussie profited from the rally of commodities and also from expansion of carry trade as speculators were buying the yen to buy assets denominated in the Australian currency.
AUD/USD rose from 1.0395 to close at 1.0465. AUD/JPY went up from 85.85 to 86.16, following the drop to 85.17. EUR/AUD closed lower from 1.2689 to 1.2673, while earlier it advanced as high s 1.2754 — the highest rate since December 30.

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