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Dollar dum dum.
I thought the aussie dollar might go back a bit this week with outlook on US brighter and possible .25 interest rate cut here tomorrow. Yet on the 6am news it was up almost a cent overnight against the US.
Anybody know why? Its great news but I honestly cant understand it sometimes. |
Re: Dollar dum dum.
Originally posted by dotty I thought the aussie dollar might go back a bit this week with outlook on US brighter and possible .25 interest rate cut here tomorrow. Yet on the 6am news it was up almost a cent overnight against the US. Anybody know why? Its great news but I honestly cant understand it sometimes. Perhaps it`s a question of confidence - the Aus economy is apparently still "booming" and the US one is still very shaky. (Ditto UK)... |
Re: Dollar dum dum.
Originally posted by dotty I thought the aussie dollar might go back a bit this week with outlook on US brighter and possible .25 interest rate cut here tomorrow. Yet on the 6am news it was up almost a cent overnight against the US. Anybody know why? Its great news but I honestly cant understand it sometimes. |
Re: Dollar dum dum.
Originally posted by Florida_03 Not exactly sure Dotty, but I think it may be just the timing of the market trading after the weekend. It is interesting and I've never understood trading in currency. Perhaps some financial wizz could explain it for us. From what I understand, when rates are cut, the value of the currency tends to decline. So perhaps people are expecting another cut in US rate (in fact there was one last week wasn't there?) which would drive the US dollar down against the $aus. If the UK follow suit (which I think would be expected), it would also put more pressure on the price of the £. The rate cut in the Aus would have an effect, but probably not enough to counter the US$ and £ (because of size of the economies). So it is quite possible that the Aus$ has gained despite the expected rates cut. As to why the rate cut affects currency, again, I am not an expert, but if the rates are cut, the interest returned from banks drops, and the money earned on bonds etc drops. Therefore investors will look for other currencies or avenues for investment... |
Re: Dollar dum dum.
Originally posted by gOD From what I understand, when rates are cut, the value of the currency tends to decline. So perhaps people are expecting another cut in US rate (in fact there was one last week wasn't there?) which would drive the US dollar down against the $aus. If the UK follow suit (which I think would be expected), it would also put more pressure on the price of the £. The rate cut in the Aus would have an effect, but probably not enough to counter the US$ and £ (because of size of the economies). So it is quite possible that the Aus$ has gained despite the expected rates cut. As to why the rate cut affects currency, again, I am not an expert, but if the rates are cut, the interest returned from banks drops, and the money earned on bonds etc drops. Therefore investors will look for other currencies or avenues for investment... |
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