The Australian Dollar’s long run for the best performing currency in 2010 is far gone as it crashed last week.
Investors seemed to dump the Australian Dollar for the safety of the US Dollar and the yen. The Australian Dollar lost ground last week on an unexpected increase in US jobless claims and ongoing concerns about the euro zone debt crisis, the sentiment surrounding risk continued to weaken as a rise in the US jobless claims added to doubts about European policy makers having a unified plan of action to solve the sovereign debt crisis in the region.
The concern about the euro zone has caused a huge sell off among the non-dollar currencies, including the Australian Dollar. If Europe deteriorates further both the Australian Dollar and the New Zealand Dollar will fall. Another wave of fear will likely affect the Australian Dollar more than the New Zealand Dollar.
According to some investors, there is still plenty of negative sentiment. Investors seem doubtful that the Reserve Bank of Australia (RBA) would step in to support the Australian Dollar.
When the RBA was asked, they said that they have a policy not to comment on market moves. The RBA said that in the past it intervened when the market was disorderly.
It said that it does not target specific Australian Dollar levels. The last time that they intervened was in October 2008, this was at the height of the financial crisis.
Exchange rates as of 14:53, 21 May 2010
AUD/ GBP: 0.5757
AUD/ EUR: 0.6005
AUD/ USD: 0.8297
AUD/ JPY: 73.143
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