The Australian dollar was flat today as Forex traders were unsure about future monetary policy of the nation’s central bank and were waiting for the minutes of this month’s policy meeting that will be released next week, hoping to understand what the bank will do.
The Reserve Bank of Australia left interest rates unchanged this month and dropped hints about future rate cuts. Yet market participants are worried that the minutes may show a possibility of additional monetary accommodation. Such prospects are not good for the Australian currency.
The Aussie (as the currency is nicknamed) is often used in carry trade, the practice of borrowing money in countries with low interest rates and investing them in countries with high borrowing costs. Australia had relatively high lending rates, attracting carry traders, but after rate cuts investors became less inclined to bring money into the country and this is hurting the Aussie.
AUD/USD rose a little from 0.9139 to 0.9146 as of 1:52 GMT today. EUR/AUD was a little soft, moving from the opening level of 1.4595 to 1.4590. AUD/JPY advanced from 88.98 to 89.11 after falling to 88.60 earlier.
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