EU Lending Package Boosts Australian Dollar

The Australian dollar rose today against its U.S. counterpart and some other majors after the European policy makers announced their plans to spend almost $1 trillion on the debt purchases to aid the debt-laden European countries, resulting in the increasing attractiveness of the riskier assets.

Australia attracts investors with its high benchmark interest rates, which are 4.5 percent, compared with the U.S. rates of 0–0.25, though the moves on the currency market may curb the profits. The yield on the 10-year benchmark notes increased by 0.10 percentage point to 5.57 percent.

The analysts say that the news about the loan package are very good for higher-yielding assets, such as the Australian dollar, the Asian currencies and the commodity currencies in general. The Aussie is expected to rise to about $0.9275.

AUD/USD rose today to about 0.9024 as of 10:19 GMT after it opened at 0.8989. EUR/AUD dropped to 1.4162 from its opening price of 1.4366. AUD/JPY traded at about 84.24.

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