Australian dollar breaks through 93 US cents after Fed rate cut |
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Published
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Thu, 01 Nov 2007 00:15
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SYDNEY (Thomson Financial) - The Australian dollar rose through the 93 US cents barrier on Thursday for the first time since the currency was floated in 1984 after the widely anticipated quarter-point cut in US interest rates.Commonwealth Bank of Australia chief currency strategist Richard Grace said the Australian dollar may reach parity with the US dollar.'All the conditions are pretty much in favor of the (Australian) dollar reaching parity but that remains to be seen,' Grace said.He said a widening interest rate gap between the US and Australia, following the overnight decision by the Federal Open Market Committee to cut the fed funds rate target by 25 basis points as well an expected 25 basis point cut in the Reserve Bank of Australia's target cash rate on Nov 7 had put a floor under the Australian dollar.'We might see some easing back from the current high level but support for Aussie is broad-based,' Grace said.Apart from the interest rate differential, Grace said favorable terms of trade plus robust commodity prices were underpinning the Australian dollar.'A return of confidence and fundamental drivers should see the Australian dollar exchange rate undertake an upward adjustment to reflect the 50-year high in Australia's terms of trade,' he said.bruce.hextall@thomson.combhx/msCOPYRIGHTCopyright Thomson Financial News Limited 2007. All rights reserved.The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
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Forex - US dollar mixed in Sydney morning trade after heavy overnight losses 