Australian dollar runs out of steam

Financial and commodity markets analytics

The Australian dollar broke back above the US72c mark today but has since retreated after a rise in commodity prices and gains on the Chinese stock market for the 2nd consecutive day.

At 10.23am GMT) the Aussie dollar was trading at US71.55c after reaching a high of US72.04c earlier in the day.

Oil gained 10% overnight marking its biggest one day gain since 2009 while copper; a very important commodity for the Australian economy had its biggest one day rise in over 2 years.

The Shanghai composite index rose 1.4% following on the gains of the previous day and bringing some relief to investors who have seen their investments fall around 40% in recent months.

Bargain hunters also pushed the Australian dollar higher, but all may be short lived according to LTG GoldRock director Andrew Barnett who noted the focus will be on America and the timing of an interesst rate rise.

"We saw good GDP overnight, better-than-expected consumer confidence and durable goods this week," he said.

"Because the US is stepping towards raising rates, that's going to keep the Aussie dollar under pressure."

Predicting a new 6 year low Mr barnett also noted that there is more pain to come for the Aussie dollar,

"I think we'll probably see it in the 60s by Christmas," he said.


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