Aussie Gains as Bernanke’s Comments Boost Demand for Higher Yield
The Australian dollar gained today as Federal Reserve Chairman Ben Bernanke signaled that the US economy still needs stimulus, making investors look for higher yield and benefiting riskier assets.
The recent decline in the unemployment rate may reflect, at least in part, a reversal of the unusually large layoffs that occurred during late 2008 and over 2009. To the extent that this reversal has been completed, further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies.
Markets reacted very favorably to the comments. In fact, some economists were puzzled by the strength of the market reaction as the Chairman didn’t say anything he hadn’t said before.
Anyway, stock market rallied and prices for raw materials soared, continuing the overall bullish trend for this year. The MSCI All Country World Index of shares has advanced 12 percent in 2012, while the Standard & Poor’s GSCI Total Return Index for commodities has gained 8.4 percent.
AUD/USD rose from 1.0461 to 1.0530 and AUD/JPY climbed from 86.20 to 87.22 as of 22:50 GMT today. AUD/CHF was at about 0.9505, following the jump from 0.9493 to 0.9544.
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Earlier News About the Australian Dollar:
- Australian Dollar Gains as Fed Considers Dropping of Monetary Easing (2012-03-24)
- AUD Falls on Stevens' Comments (2012-03-19)
- AUD/JPY Reaches 10-Month High (2012-03-17)
- Australian Dollar Jumps on US Economic Recovery (2012-03-14)
- Weekly Losses of AUD Caused by Bad Fundamentals in Australia (2012-03-10)