Resolved Question
Is the AUD rIsing lately because of rIsing gold?
AUD is rising isnt it? is it because of the rising price of commodities, especially gold? thx
over 2 years ago
Best Answer - Chosen by Asker
AUD is rising lately due to a couple of reasons.1. You are correct about gold for two reasons. Australia is one of the top 3 producers of gold in the world. And the USD has an inverse correlation with gold. So as the price of gold goes up the USD tends to weaken. Many are linking this due to future expectations about inflation.2. The resurgence of the carry trade is making the AUD a popular choice to use in the carry trade. Australia's target interest rate set by the Reserve Bank of Australia is 3.50%, and interest rates are expected to increase over the next year due to a robust Australian economy. Make sure to watch the weekly calendar for AUD economic reports http://www.dailyfx.com/calendar/
over 2 years ago
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Answers (2)
Yes, the AUD has been on an uptrend since March this year. In economic terms, the rise in gold prices together with some other factors can 'explain' why so. Remember that Australia escaped a technical recession during 1Q of 2009 by posting a growth of 0.4%. So between US and Australia, the latter appears to have a stronger economy. Also, like what my friend JasonRogers here said, Australia has one of the highest interest rates around. Recently, the RBA hike its rate to 3.50% from 3.25%. The US, on the other hand, only has a rate of 0.25%. This means that investments in Australia are more attractive than in the US. Of course, one need to have their money changed to AUD to be able to invest in Australia. Hence, the high demand for AUD.
over 2 years ago
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The first answer posted here is great. The only thing I would like to add is that Australia is a commodity rich county and with the rising prices of all commodities its economy is strengthening across the commodity board not solely due to gold.
Peace
over 2 years ago
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