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Dollar rebounds

 

chart, arrow, dollar, up, graphThe Australian dollar has bounced back from its tumble after the Reserve Bank said it hasn’t ruled out intervention to bring the currency lower.

At 0700 AEDT on Friday, the local currency was trading at 87.23 US cents, up from 87.02 cents on Thursday.

The Australian dollar shed half a cent, falling to an intra-day low of 86.73 US cents on Thursday afternoon after RBA assistant governor, Christopher Kent, said intervention to lower the “too high” exchange rate was still an option.

But the currency quickly recovered, bouncing back above 87 US cents within half an hour.

Weak Chinese industrial production and retail sales data, released later on Thursday afternoon, also failed to have a lasting impact on the currency, BK Asset Management MD, Boris Schlossberg, said.

“Upon further reflection, Dr Kent’s comments were seen as simply another attempt at jawboning by the RBA and the Aussie quickly regained its footing,” Schlossberg said.

“Not even the subpar Chinese data … could slow down the short covering rally and by early London dealing, the Australian dollar was trading at 87.40 US cents, within striking distance of the 87.50 cent level.”

Schlossberg said a lack of economic news or data on the horizon was driving investors to the Australian dollar.

“One key reason for the Aussie’s relative strength is that the current G10 policy positions look to be at a standstill,” he said.

“With the European Central Bank unwilling to formally authorise dramatic increase in its asset base and with the US Federal Reserve essentially watching the economic indicators for the next few months before it decides on interest rate policy, there appears to be little event risk to move currency prices until next year.”

AAP

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