Australian dollar gains
Yesterday, the local currency and other commodity-linked currencies are higher, helped by a rise in oil prices and growing optimism that China and the United States may be inching toward a trade deal.
News that the two sides had agreed to extend trade talks in Beijing for an unscheduled third day on Wednesday boosted oil prices, with US West Texas Intermediate (WTI) crude oil futures topping $50 a barrel for the first time this year.
That, in turn, helped spur demand for riskier assets and commodity-linked currencies.
“Markets are finding comfort in the fact that the trading level of WTI futures has shifted above $50 a barrel,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
“Commodity-linked currencies are performing strongly as a result,” he said, noting that the WTI futures had tried, but were not able to cross the psychologically-important level during the previous trading session.
The Aussie dollar, often considered a gauge of global risk appetite as well as a liquid proxy of Chinese growth because of Australia’s export-reliant economy, was up 0.3 per cent at 71.62 cents.
The rally in riskier assets has accelerated since last Friday when Federal Reserve Chairman Jerome Powell said he was aware of risks to the economy and would be patient and flexible in policy decisions this year.
“The market became too pessimistic about the global economy up to the beginning of the year, but it seems this kind of pessimism is fading,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
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