Dollar hits two week high

 

dollar, money, notes, australianThe Australian dollar rose to a two-week high after the Reserve Bank of Australia kept the cash rate unchanged and issued a neutral statement on the chance of further cuts.

At 0700 AEST on Wednesday, the local unit was trading at 90.64 US cents, up from 90.34 cents on Tuesday.

In overnight trade, the currency peaked at 90.73 US cents, its highest level since August 20.

The RBA statement that came with Tuesday’s decision to keep the cash rate at a record low of 2.5 per cent covered no new ground and had little guidance on future rate movements.

BK Asset management managing director Kathy Lien said the RBA’s omission drove the Australian dollar above 90 US cents and kept it there.

“The central bank omitted the words `scope to ease policy further’ from their statement, diminishing the possibility of another rate cut this year,” she said from New York.

“The outperformance of the Australian dollar versus the US dollar is an example of how economic developments could impact a currency as the market waits for a decision on Syria.

“Unless there is an official announcement of military action by the US government, economic data and central bank rate decisions will drive currency flows.”

The European Central Bank, the Bank of England and the Bank of Japan all make monetary policy decisions this week.

In Australia on Wednesday, official national accounts data, including gross domestic product figures, will be released and are expected to show the economy grew by 0.6 per cent in the June quarter for an annual rate of 2.5 per cent.

AAP

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