The Australian dollar is sharply up today hitting a 2-week high of US74.30c as the RBA toned down their rhetoric on the current level of the local currency.

In their latest board meeting the Reserve bank of Australia noted that the Australian economy is beginning to adjust to the “significant decline in `key commodity prices” which lead many analysts to believe that the central bank may now hold off raising interest rates further.

The rebound in the Iron ore price which the local economy is so reliant on  also helped the Aussie dollar.

The sudden bounce in the currency however may be short lived as problems over the growth of China’s economy persist with investors still shaking over the sudden drop in the Chinese stock market, which has fallen over 30% recently.

There is also the uncertainty over the timing of an interest rate hike from the US Federal reserve which is going to keep pressure on the Australian dollar as we head into the next few months.

The market is now pricing in a 50% chance that the Fed will raise rates in September.