Yesterday the RBA in its minutes was clear that it wants the Aussie dollar lower but from almost the moment the minutes were released the AUDUSD rallied from the 0.9370 level to a high of 0.9447 high overnight.
It was a weird move in the context of the falling Australian sharemarket yesterday and the RBA’s obvious disquiet with the Aussie dollar’s strength.
But the demand for Australia’s first 20-year bond, which was increased from an expected $3.5 billion issue size to a new record for an issue by the Australian Government of $5.9 billion, helps explain why the Aussie dollar rose so strongly overnight.
The AFR reports this morning that Rob Nicholl the CEO of the Australian Office of Financial Management implied that the big upscale of the issue was a result of offshore demand.
It is a reflection of our bond market being high quality, liquid and triple-A rated. It is also a further reflection of the strength of the market which has grown over the last few years
So the debt ceiling debate looks like it’s a furphy – at least for foreign investors who just can’t get enough Aussie bonds and Aussie dollars.