AUD Posts Weekly Gains with Help from RBA & Employment

The surprising decision of the Reserve Bank of Australia to keep its interest rates high and positive employment data allowed the Australian dollar to gain this week. Not everything was favorable for the currency and it slipped against the Japanese yen.

Most analysts have been sure that the RBA would cut borrowing costs and the decision to abstain from lowering rates was a real surprise. Very good employment figures added to the bullish momentum of the Aussie, especially against New Zealand’s currency that suffered from poor domestic employment data.

Outside of Australia, the most important event this week was the US presidential election. The victory of Barack Obama had a mixed impact on the Forex market. Initially, talks about the so-called fiscal cliff emerged, igniting risk aversion, but later the mood changed as economists considered that the reelection of Obama means that quantitative easing will stay in place. Europe’s influence on the market’s sentiment was much clearer: it was persistently bad.

The Australian currency was strong the first half of the week (especially on Tuesday, when the RBA announced its decision), but became softer the second half. The Aussie managed to keep its gains versus the greenback, but failed to stay above the weekly open versus the yen. The Australian dollar was higher against the euro every single day of the week (in fact, the Aussie had seven trading days of gains versus the shared European currency). Against the New Zealand dollar, the Aussie pulled back on Friday, but the gains of the previous four day were so big that the retreat of the last trading day did not affect the weekly gain too much.

AUD/USD was higher from 1.0337 to 1.0384 this week, while its weekly high was at 1.0478 — the highest level since September 21. AUD/JPY declined from 83.13 to 82.53. EUR/AUD sank from 1.2392 to 1.2233, reaching the lowest closing price since September 3. AUD/NZD surged from 1.2537 to 1.2744 and its weekly high of 1.2788 was the highest since September 10.

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