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Australian dollar may rebound
Published on 21.11.2016 22:40

The Australian dollar has pushed higher in late trading today and some are predicting that the currency could push much higher if commodities continue on their winning ways.

At5.13pm (GMT) the Aussie dollar was trading at US73.59c up from   US73.38c in yesterday’s trading.

While most are predicting the Reserve Bank of Australia will need to cut interest rates to boost inflation, others like Goldman Sachs chief economist Tim Toohey see the next move as up and along with a continued rally in commodity prices, could see the Australian dollar back towards the US80c mark.

The Aussie dollar has been caught in the crossfire between the strong rise in commodity prices and the sell-off of yield-based strategies which global investors had expressed in Australian assets," Mr Toohey said.

“As the wash-out in yield strategies matures we believe forex investors will take up the narrative of a sharply improving trade balance, improving private sector demand indicators and the risk that the RBA contemplates hiking rates in 2017 as key reasons for the Australian dollar to commence an upswing." He added.

"We now see very limited downside risk for the A$ and considerable upside risk. Indeed, a spike in the $A through US80c cannot be ruled out


Andrew Masters

Analyst

The power of leverage is the power of Forex.
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