Aussie dollar enjoys strong support in yield-hungry environment

“The Aussie dollar is finding huge demand on any dips and should remain so in this low-cost cash environment,” said Stephen Innes, senior currency trader at FX and CD provider OANDA Australia and Asia Pacific.

According to Innes, external factors continue to drive the Australian dollar in the current yield-hungry environment.

He pointed out that traders were quick to brush aside speculations that the Reserve Bank of Australia (RBA) will be cutting rates further.

Yesterday, the National Australia Bank July business survey said it is forecasting lower interest rates amid calls for “unconventional monetary policy”.

Despite all the calls for lower interest rates, Innes said higher yielding currencies (including the Aussie dollar) continue to lead the charge.

“Higher yielding currencies is stoked by booming risk appetite as the market is buying into the underlying premise that the US economy is robust, but not churning at sufficient levels to warrant any immediate policy response,” said Innes. 

“This argument was reinforced by a less optimistic US non–farm productivity print which unexpectedly fell in the second quarter tempering the markets elation from last Friday’s impressive non-farm payrolls,” he said. 

******

For more information, visit: https://www.oanda.com/

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.