Dollar bounces

dollar, cash, moneyBetter economic figures out of the US have failed to deter the Australian dollar, which rallied to a two month high overnight.

At 0700 AEDT on Wednesday, the local currency was trading at 78.76 US cents, up from 78.67 cents on Tuesday.

The Australian dollar bounced as high as 79.38 US cents overnight, its highest level since January 28.

That was despite strong economic data out of the US, where core inflation ticked up to 1.7 per cent and sales of new homes climbed to their fastest pace in seven years.

Bank of New Zealand, strategist, Kymberly Martin, said the Aussie dollar reached its peak around the time the US inflation data were released, despite the figures being stronger than market expectations.

“If you look across the board at the US data, it was generally on the firmer side,” Martin said.

“What we’re seeing generally across the currency market is a bit of increased volatility, which represents the fact that we’re now into the countdown for the first US Federal Reserve rate hike.

“I think we’ll continue to see greater volatility in coming months and the Aussie dollar will be one of the recipients of that.”

AAP

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