Australian Dollars Higher on Election of New P.M., while U.S. Dollar Dips in Asia

By: Barbara Zigah

The U.S. currency was kept on the backfoot in Asian trading today following the U.S. Federal Reserve’s pledge to hold interest rates at their near historic lows. A senior manager of forex trading in Japan commented that although the U.S. Dollar was under pressure following the Federal Open Market Committee’s announcement, there is still no good buy alternative to the greenback either. In the statement issued, the administration noted that there remains areas of weakness within certain sectors of the U.S. economy. Seemingly in support of that statement, data released yesterday shows that the sale of new single family homes in the United States dropped more than expected last month. As reported at 2:21 p.m. (JST) in Tokyo, the U.S. Dollar Index, which is a measure of the greenback’s strength versus a basket of weighted major currencies, slipped to 85.694 DXY, a loss of .1%.

Meanwhile, in Australia, the Aussie rose following the election of a new Prime Minister, at one point trading at a high of $0.8771 against the greenback, though it later trimmed gains and held at $0.8742. This political positioning by the ruling Labor Party is seen as positive news for the Australian currency, as well as their equity market, over the short to medium term. The new Prime Minister, Julia Gillard, is expected to address the mining tax controversy by setting up further negotiations.