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Money The Aussie dollar has been flying over the past month, but the NAB says turbulence is on the way

14:07  14 january  2018
14:07  14 january  2018 Source:   businessinsider.com.au

Aussie dollar eyes off 79 US cents

  Aussie dollar eyes off 79 US cents The Australian dollar has yo-yoed higher against its strengthened US counterpart with the focus now on the 78.80 US cent mark.At 0635 AEDT on Thursday, the Australian dollar was worth 78.32 US cents, up from 78.22 US cents on Wednesday.

The Australian dollar has been on the charge over the past month , rallying by over 5% against the US dollar . To the National Australia Bank ( NAB ), almost all of the strength has been due to one single factor: stronger commodity prices.

The Aussie dollar has been # flying over the past month , but the @ NAB says turbulence is on the way - Business Insider Australia :http Hover over the profile pic and click the Following button to unfollow any account. Say a lot with a little. When you see a Tweet you love, tap the heart — it lets

  The Aussie dollar has been flying over the past month, but the NAB says turbulence is on the way © Saeed Khan/AFP/Getty Images The Australian dollar has been on the charge over the past month, rallying by over 5% against the US dollar.

The AUD/USD briefly traded above 79 cents earlier today, the highest level that it's ventured since late September.

a screenshot of a video game© Provided by Business Insider Inc So, what's been driving this sudden and spectacular revival, seeing it lift from 75 cents to 79 cents in little over a month?

To the National Australia Bank (NAB), almost all of the strength has been due to one single factor: stronger commodity prices.

"Since December 8, the rise in our fair value estimate... is almost entirely explained by the rise in commodity prices with base metals, gold and oil leading the way," says Ray Attrill, Head of FX Strategy at the NAB.

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The Australian dollar fell heavily in overnight trade, mirroring declines seen in stocks and other higher-yielding currencies. Against the US dollar , the Aussie Ray Attrill, global co-head of FX strategy at the NAB , notes the Australian dollar has been the worst performing G10 in the past 24 hours.

The Aussie dollar has been flying over the past month , but the NAB says turbulence is on the way (via @BIAUS) https This is 6 quarters of continuous growth in job vacancies & the highest level in more than 2 yrs. More to do but on the right track.

"The broadening of the global growth recovery, evident in the healthy December PMI readings across the globe, has undoubtedly been a factor supporting commodities with China’s readings in particular surprising on the upside despite concerns for a potential pullback.

"China’s environmental initiatives have also played a role, lifting demand for higher grade imported coal and iron ore, further enhancing the AUD uplift from commodities."

Aussie dollar teeters on the edge of 79 US cents

  Aussie dollar teeters on the edge of 79 US cents The Australian has extended the lift it gained from strong retail trade figures on Thursday, and is heading toward the 79 US cent mark.At 0635 AEDT on Friday, the Australian dollar was worth 78.92 US cents, up from 78.74 US cents on Thursday.

(Read More: Australian dollar has a huge day, thanks to RBA). "After selling off for the past three months with virtually no relief rallies, we believe that the Australian dollar has officially bottomed," said Lien. While she expects the Aussie to stabilize over the next two months , she says it will

The Aussie has been buoyed by a rebound in iron ore prices. Secondly, Mr Dales isn't convinced the recent spike in iron ore prices, which have shot up 25 per cent over the past month to $US67 a tonne, will last.

a screenshot of a cell phone© Provided by Business Insider Inc Alongside the boost the Aussie has received from firmer commodity prices, Attrill says that a "loss of positive USD momentum since early November, a further lift in already buoyant risk sentiment and some chunky M&A announcements, have all played a part in supporting the AUD".

Over the near term, Attrill says the momentum the Aussie has enjoyed over the past month will likely continue, suggesting that it "has room to trade higher and even spend some time back above 80 cents".

However, he thinks the tailwinds for the Aussie are unlikely to last longer-term.

"We think the main forces that have driven the AUD to close to 79 cents -- USD weakness, strong commodity prices, probable M&A flows and super-strong risk sentiment, are unlikely to persist over the course of 2018. And as we saw last September, when one of these factors turns against the AUD, others often do at the same time."

As such, Attrill says the AUD/USD is still likely fall back into the 70-75 cent region in 2018, although he admits that it may take longer than his earlier forecast for the first quarter of the year.

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