The Australian dollar made to new levels that had not seen since mid 2008 before the start of the global financial crisis - as traders felt more confident from ever-more encouraging economic data out of the US. The AUD touched a peak of 94.57 US cents, climbing almost a full US cent on September 15th. Its rise was largely on the back of a fall in the value of the greenback.
It has come back a little in recent offshore trade but was this morning still buying 94.2 US cents after hovering around the high 93-US-cent range earlier. It was also trading at 72.32 euro cents, just off a record high achieved in recent sessions.
Since 3th of September, AUD has risen more than 4%. The AUD benefits when international investors and traders believe the signs are good for the global economy. US retail sales figures out overnight were a welcome sign, indicating a double-dip recession in the world's largest economy was less likely.
The Aussie dollar is closely linked to commodities prices - and commodities sales benefit when economies are growing because demand is high. That in turn bolsters the value of the dollar against many foreign currencies. The AUD's worth depends heavily on the international factors and a fall in the value of the USD was a gift.
USD weakened against the yen, euro and British pound after Goldman Sachs economist Jan Hatzius predicted that the US central bank, The Federal Reserve, would probably begin buying $US1 trillion worth of Treasury bonds later this year.
The practice known as quantitative easing aims to spur growth in the US economy. But the flood of USD into economy weakens the currency and that in turn prompts traders to seek alternative investments, including gold and some other currencies.
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