05 January 2010
Australian dollar reaches high on global economic optimism
The Australian dollar traded against the US dollar at near strongest levels in a month due to demand for assets on the back of increased optimism for a global economic recovery.
Bloomberg reported that Australia’s currency hit the highest mark in more than two months against the yen before the release of a US report that showing factory orders rose for a third month that encouraged investors to buy higher-yielding assets.
The price of Australian commodities, which make up more than half of the nation’s exports, reached a 14-month high that economists say is the result of the global economy recovery and the still relatively cheap Australian currency.
Demand for Australian dollars was also given a boost by a report that showed sales of newly-built homes rose by 0.3 per cent in November after an October slump due to the raising of the national interest rates by the Australian Reserve Bank. The raising of the interest rates by the nation’s central bank was the first in the world, and an indication of the country’s monitoring of economic growth and helping keep inflation low.
The Australian dollar is also the key beneficiary of the strength of the Chinese economy.
The Australian share market closed stronger as materials and energy sectors, major sectors in the Australian economy, were helped by rising commodity prices.