The Aussie dollar is still going strong, trading up to a high of US92.44c last night after the speech by RBA governor Glenn Stevens on the economic outlook seemed to embolden the bulls that the outlook both here in Australia and offshore is positive.
Spiros Papadopoulos, writing in the NAB’s morning report, said Stevens was “optimistic that the ‘handover’ from mining-led growth to broader private demand growth is beginning, so at this stage he clearly doesn’t believe he will have to cut the cash rate again.”
That’s what FX traders heard – what they chose to ignore was the message that Stevens “expects the AUD to decline along with the expected fall in the terms of trade”.
The Aussie jumped 30 points during the speech and then European traders took it further to the highest price since November 2013. The current move opens up the chance of further appreciation to 0.9350 and perhaps even 0.9450, according to the technicians.
The RBA will be watching this move closely as the Aussie has given back almost 6c – more than half – of the depreciation since Stevens first intervened verbally in forex markets last year.