Australian Dollar Posts Weekly Drop on Stocks

The Australian dollar had one of the weakest performs in the past months this week as stocks declined worldwide, declining attractiveness for riskier assets as the opportunities available in the Australian high-yielding financial markets, forcing also the New Zealand currency down.

Currencies in the South Pacific region had one of the worst performances in around two months this week as a shift in risk levels set the price of stocks and commodities down specially towards the end of the week, providing support for the U.S. dollar and the Japanese yen to post the sharpest gains versus the Aussie dollar, as investors purchased Treasuries in the North American nation to protect their portfolio for eventual turbulence towards the end of the year in trading markets. Speculations indicating that gains in stocks would be beyond companies’ profit capacity were the main reason for a shift in risk sentiment that moved markets down the last days impacting specially currencies like the Aussie and the Canadian dollar.

A number of analysts affirm that after a long winning streak that set the Australian dollar to be the second best performer in currency markets this year may be cooling down, as the strong risk appetite that appeared when the world economy surged from the global slump is tending to stabilize itself, bringing the Aussie to a less attractive performance towards the end of the year.

AUD/USD closed the week at 0.9142 from an opening price of 0.9335. AUD/JPY closed at 81.21, a significant weekly drop from 83.48.

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