The Australian dollar continues to hold above US75 cents despite the Reserve Bank cutting the cash rate this month to a record low of 1.5 per cent.
Currency Specialist Alex Cook said “The Australian Dollar keeps finding support as global interest rates also collapse.”
“Ignoring the doomsayers’ predictions that the Aussie dollar will be somewhere in the US60c area, it has bounced on the lack of rate movement from the U.S., strong commodity numbers and impressive equity markets.”
“Investors worldwide appear to be increasing their appetite for risk assets, such as the Australian dollar and bonds. Further continuing the good run of the Aussie dollar has been Australia’s unemployment numbers, with the unemployment rate this week dropping to 5.7 per cent”, he added.
The Reserve Bank’s attempts through rate cuts to drop the Australian dollar are being undermined by so far unsuccessful measures taken by overseas central banks to stimulate their economies.
Mr Cook added “Our low inflation rate, combined with the continuing, relative strength of our economy, means the Australian dollar will continue to trade at relatively high levels to its peers”.
He said there was great uncertainty in global markets following the Brexit vote with World First recommending to clients, who include importers and travellers, that they buy US dollars and/or hedge their exposure to protect themselves against a possible sliding Australian dollar.
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