The Aussie slightly rose against the greenback on Tuesday, trading near a two-week high around $0.9390 while the greenback continues to drop and investors speculate about how long the Federal Reserve will keep its monthly bond-buying program at its current pace.
The Australian dollar edged 0.22% higher against its US peer, standing at $0.9397 as of 6:59am GMT.
Australia’s central bank held its benchmark rate at record-low of 2.5% earlier this month as the country’s economy remains weak. According to minutes from the bank, the bank may cut its rate even further if necessary. The minutes stated that the local currency remained high and that a lower currency would help the economy balance its growth.
“The exchange rate had appreciated somewhat over the past three months and the fall in mining investment was expected to be larger than previously expected,” the bank report stated.
A drop in the Aussie would help lighten some weight from the tradable sector and promote local production. A monetary policy from overseas nations, especially the US, would make the aussie dollar more attractive to traders. The US Federal Reserve (Fed) has had an influence on the Australian dollar, as the US central bank injects $85 billion into the US economy monthly until the US economy is stronger.
Market participants continue to speculate on if the Federal Reserve (Fed) would begin to taper its monthly bond-buying program at its next meeting, scheduled for December 17-18.
Last week, a string of data’s released revealed mix signals as the upbeat non-payrolls climbed 204,000 higher in October while the jobless claims figures remained high.
On Thursday, Fed Chairperson nominee Janet Yellen said she would support the central bank’s monetary policy for an extended period until the US economy is stronger. Yellen commented on inflation and said the unemployment rate remains high and hinted that the Fed will not begin to scale-back on the quantitative easing program which has been supporting the world’s largest economy.
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