The Australian dollar rebounded today even as downbeat mood among Forex market participants sapped demand for riskier currencies tied to commodities.
Europe continues to exert its negative influence on markets across the world. Commodities felt that influence as was shown by the Standard & Poorâs GSCI Index of 24 raw materials that fell 0.2 percent. It could be expected that commodity currencies decline in such an environment. Yet the Australian currency managed to rally even in such conditions.
Ravi Bharadwaj, a market analyst at Western Union Business Solutions, said:
We can see the Australian economy hasnât been dealt as much of a blow as currencies that traded a lot more frequently with the euro zone. Itâs probably just a case of the currency starting to reflect its domestic economic developments.
Martin Parkinson, the Secretary of the Department of the Treasury of Australia, claimed that the country can withstand adverse impact of the European crisis. He stated that Australian “banks are well-capitalized and have sufficient resources to withstand a freeze in international capital markets for several months” and explained that Australian’s “main trade links are with the emerging Asian economies”.
AUD/USD was flat at 1.0116 as of 23:36 GMT today, following the earlier drop to 1.0057. AUD/JPY edged up from 79.69 to 79.99. EUR/AUD dipped from 1.2545 to 1.2440 and its intraday low of 1.2393 was the lowest since March 16.
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