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The Aussie traded between 1, 716 and 1, 745 to the British Pound in the last week of July 2010, and began the week trading at 1, 116 to the US Dollar and ended at 1, 110.
The Aussie closed higher on Friday ahead of expected weak economic data from the United States, the US economy seems to be losing steam in its recovery, and bets are that Aussie rates won’t rise much further from here. The Reserve Bank is expected to leave rates unchanged at 4.5 per cent at its next policy meeting on Tuesday. Disappointing US economic data had walloped the US dollar and benefitted the Aussie with the Aussie having another leg-up with its high-yield allure to investors.
The Aussie held on to most of its recent robust gains by the end of the week despite a spell of profit-taking, to make their best monthly performance in almost a year and for all of this month, the Aussie was up 7 per cent, clearly its best performance in any month since June 2009.
The Aussie had however weakened after a Reserve Bank report showed bank lending grew in June at the weakest pace in seven months. With neutral interest rates and the economy moving to trend growth, the Reserve Bank is going to be very comfortable with the setting of policy for the remainder of the year, which is the prediction from some economists. The Reserve Bank of Australia will likely increase the key rate by 25 bps in each quarter of next year. Declines in the Aussie against the US Dollar were limited on speculation that fund managers will sell the US Dollar and buy higher-yielding currencies, like the Aussie, as it rebalances their portfolios at month-end.
AUD/ GBP: 0, 5770
AUD/ EUR 0, 6884
AUD/ USD: 0, 9009
AUD/ JPY: 78, 7252
Exchange rates as of 14:17, 30 July 2010
: Note: The above exchange rates are based on "interbank" rates.
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www.australiantimes.co.uk/currency
Risk Adverse Market Puts Australian dollar on the Defensive