By TraderVox.com
Tradervox (Dublin) – The recent risk aversion in the market seems to have loosened its grip as commodity currencies are showing some strength since the start of the month. The current surge of the Canadian and Australian dollar is as a result of measures by the respective central banks to use available resources to curb the effects of crisis in Europe. The Bank of Canada policy makers indicated that they may raise interest rates as domestic economy is within the projected range.
This led the strongest advance of the loonie from a six month low. On the other hand, after the RBA policy makers decided to lower the interest rates, the Aussie has gained against the yen and dollar as investors placed bets the euro will not decline. The Australian dollar rallied to its strongest in a week as the New Zealand currency increased against the yen as global stocks advanced. The Reserve Bank of Australia decided to cut interest rates by 0.25 percent to 3.5 to spur growth in the country’s economy.
Economists are predicting further reduction in the future as measures to protect the economy from the effects of euro area crisis. The market is also expecting a report from the central bank to show that the country’s gross domestic product grew by 3.3 percent in the first three months of the year. In Canada, loonie advanced against the US dollar after the BOC governor, Mark Carney, stated that the bank may withdraw from the current monetary policy increasing the demand for the loonie.
The loonie increased by 0.1 percent against the dollar to exchange at C$1.0381 per US dollar, it had fallen by 0.3 percent yesterday. The Australian dollar increased by 0.1 percent to 97.42 US cents by the end of trading yesterday in New York where it had touched 98.04 US cents the strongest it has been since May 30. The Aussie was up by 0.7 percent against the yen to trade at 76.72 yen.
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