By: Barbara Zigah
A surprise rate hike by the Australian central Bank helped push the Aussie higher against the greenback in Asian trading today. As reported at 2:27 p.m. (JST) in Tokyo, the Australian Dollar traded against the U.S. Dollar at $.9983, slightly off the earlier $.9993 high struck
immediately following the announcement and the 4th consecutive trading day that the Aussie has gained on the greenback.
It was a little more than two weeks ago, on October 15th, that the Aussie Dollar struck parity with the greenback, it has since fallen just short. Any further gains for the Australian currency will be limited, however, as markets remain cautious ahead of the U.S. Federal Reserve’s 2-day policy meeting which will begin later today. Still, volatility in the Aussie is expected once markets have factored in the Fed’s decision.
The Reserve Bank of Australia moved to raise their cash rate 25 basis points, from 4.50% to 4.75%, in defiance of a majority of economists’ speculation which expected the central bank would hold the rate steady for the 7th consecutive month. According to Glenn Stevens, the Governor of the RBA, upbeat economic data and some “spare capacity” in the economy are what lead to their decision in favor of the rate hike.