Homepage de2 Communications newsroom

Aussie dollar clear winner in the global chase for yield environment

Announcement posted by de2 Communications 03 Aug 2016

3 August 2016: SYDNEY -- The Australian dollar is trading at .7600 level this morning and is expected to march higher in the near term despite the rate cut by the Reserve Bank of Australia (RBA) yesterday.

“We saw a fairly muted response to the RBA rate cut yesterday,” said Stephen Innes, senior currency trader at FX and CD provider OANDA Australia and Asia Pacific.

He added, “The Aussie dollar is a clear winner in this chase for yield environment. The Aussie is enjoying Australia’s Triple-A credit rating coupled with a 1.8% 10-Year coupon, which is attracting waves of foreign investor capital as global “core" interest rates continue to fall.

Innes added, “We are in a brave new world of central bank easing followed by hard-to-explain currency strength,” 

“Clearly, we have different dynamics in play post Brexit as real global interest rates continued to fall, and the chase for yield has been the dominant theme,”

According to Innes, the RBA rate cut was widely anticipated, which partially explained the muted reaction.

“However, investors continue to shy away from the US dollar after last week’s shocking US Q2 GDP, and this likely cushioned the Aussie dollar from a larger kneejerk sell-off.”

He pointed out that the lack of forward guidance raises the obvious question will a weak Q3 CPI lead to a November cut?

Innes added, “Currently, the market is calling yesterday a one and done move for the remainder of 2016.”

At the moment, he added that the lack of US dollar appetite could mean the Australian dollar will continue to march higher over the near term. 


********

For more information, visit: http://pages.oanda.com/Forex-Landing-Pages_australia.html

About OANDA

OANDA transformed the business of foreign exchange through an innovative approach to forex trading. The company’s industry leading online trading platform, fxTrade, introduced a number of firsts to the marketplace, including immediate execution; instant settlement on trades; trades of any size between one unit and 10 million units; and interest calculated by the second. Over the years, the company has been presented with a host of international awards, which attest to the power and flexibility of its world-class trading platform.

 

According to the 2015 Australia Foreign Exchange Report conducted by Investment Trends, Australian traders voted OANDA the industry leader for education, value for money, consistency of filling trades at the quoted price, commissions, research tools and ease of platform use.

 OANDA was also the first online provider of comprehensive currency exchange information, and today the company is trusted by some of the world’s leading audit firms, taxation authorities and corporates, all of whom turn to OANDA Rates® as the globally recognised standard for accurate exchange rates data. The firm counts global brands including Deloitte, KPMG, PWC, Twitter, Tesla, Expedia and Airbnb among its clients.

OANDA has eight offices worldwide, in Toronto, Chicago, New York, Boston, London, Singapore, Tokyo and Sydney. OANDA is fully regulated by the U.S. Commodity Futures Trading Commission (CFTC), the U.S. National Futures Association (NFA), the Monetary Authority of Singapore (MAS), the Investment Industry Regulatory Organization of Canada (IIROC), the UK Financial Conduct Authority (FCA), the Japanese Financial Services Agency (FSA), and the Australian Securities and Investments Commission (ASIC).