Australian dollar hits two-year high
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The Australian dollar has hit its highest point since March 2015 yesterday, soaring to US$79.04. The rise came after the RBA released its July meeting minutes, which revealed a positive economic outlook.
The Australian dollar has risen 9.9% against the US dollar so far for 2017, rising a significant 1.5% overnight and peaking at a high of US$79.43.
In its statement this morning, AFEX Market Watch said, "AUD rose for the seventh day out of eight, a run that has seen it record a cumulative gain of 4.5 per cent. In what was its best day since March, it marked its highest level since May 2015."
The RBA minutes, which were released yesterday, cited the falling unemployment rate and an increase in positive government spending towards infrastructure projects as contributing factors towards a possible rate hike soon.
The RBA has suggested a cash rate of 3.5% as the soon-to-be new norm, which is eight rate hikes above today's current cash rate of 1.5%. This goes against market speculation that rate hikes are unlikely until at least 2018.
"The AUD is now trading at a new 26-month high and given the ongoing negative USD sentiment, a move above 80¢ looks to be just a matter of time," NAB currency strategist Rodrigo Catril said to the AFR.
This strengthening of the Australian dollar comes at the expense of the US dollar, which has been on a slow decline over the past 10 months, likely attributed to the election of US President Donald Trump which has sparked worldwide controversy.
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