Australian Dollar Benefits from Rally on Stock Markets

The Australian currency managed to set new highs against its major counterparts or simply rise against those that were too fast to chase for the new records. The AUD benefited from the elevated interest in high-yieldingcommodity-related assets.

The Australian dollar (or Aussie) went up to 10-week high against its US namesake, a decades-long maximum against the euro, and advanced against the Japanese yen. The currency also rose to 2-month high versus its New Zealand counterpart and reached the March high levels against the Canadian dollar. which was also rising today alongside the Aussie.

The AUD is benefiting from the expectations that the Federal Reserve will not hesitate to provide economic stimulus if the urgent need arises. On the one hand, Ben Bernanke did not mention any planned actions during his second day of the semiannual testimony before the US Congress, delivered to the House Committee of Financial Services today. On the other hand, he reiterated his statement about readiness “to take further action”:

…the Committee made clear at its June meeting that it is prepared to take further action as appropriate to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

The stock markets across the globe reacted with a very positive mood. S&P500 is currently rising more than 0.7 percent, while Brazilian Bovespa is close to the 1 percent gain.

AUD/USD increased from 1.0315 to 1.0359 as of 17:08 GMT today with an intraday high at 1.0363 — the maximum level since May 1 this year. AUD/JPY rose from 81.55 to 81.64, while EUR/AUD fell from 1.1915 to 1.1840, setting a new low level since 1985 at 1.1834.

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