The Australian dollar is trading higher today on the back of higher oil prices and speculation on further moves by the European Central Bank.
At 7.41am (GMT) the Aussie dollar was trading at US US70.14c up from US69.97c in yesterday’s trade.
After weeks of decline, Brent crude oil rose nearly 6 percent overnight, heading back towards the US$30 a barrel mark which many saw as a relief rally and will only be temporary as Iranian oil comes on line after the lifting of sanctions, which is further expected to flood the market.
In their latest meeting, the ECB left rates on hold at 0.05 percent but it was the following monetary statement by the Central Bank that had markets on edge and sent investors flocking into riskier currencies like the Australian dollar.
The ECB noted that there were growing concerns about the instability in financial markets as well the problems developing in China, the world’s second largest economy, and speculation is now rife that they will increase their stimulus package in the March meeting.
The market will now pay attention to ECB president Mario Draghi’s speech today at the World economic forum in Davos for more signs of the banks future movements and further volatility in the Australian dollar is expected.
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