Interest-rate advantage spurs Aussie – Consumer demand may boost Greenback

Interest-rate advantage spurs Aussie – Consumer demand may boost Greenback

04-10-2010 13:15

The Australian Dollar gained against the Greenback for the second consecutive day. The Reserve Bank of Australia increased its benchmark rate on April 6th. This resulted in the Australian interest-rate advantage over the US reaching its highest level since 2008. The US Dollar slid against the Euro but gained versus the Japanese Yen.

Reserve Bank of Australia

Australia’s central bank stated that the interest hike was another step in the process of creating average interest rate levels. The Aussie Dollar was also boosted by the increasing demand for more-profitable trading options. This was the result of easing concerns regarding the Greece’s budget problems. The South Pacific nation will preserve its yield advantage versus other first world countries. Australia’s economy performs robustly and confidence in the Australian economy could result in growing capital influxes into the Australian Dollar.

Greenback

The Greenback dropped versus the Common European Currency as concerns regarding the Greece debt default lessened. In the meantime, the US Dollar rose against the Japanese Yen. The Greenback may be boosted by the supposedly improving consumer demand. This revival implicates that the economy improves and that the consumer purchasing power increases.

Consumer buying

The recovering job market is leading the rising consumer demand. It also bolsters consumer confidence and stimulates consumers to spend money. Household spending rose by approximately 3% on a yearly basis in the first three months of 2010 as reports showed that companies created 162.000 jobs. Nevertheless, the US central bank may maintain the interest rates low until the third quarter as inflation declines and due to continuing concerns regarding the joblessness rate.