By Rita Ruvinski – The Australian dollar hit a 2 year high against the EUR Wednesday and a 3 week high versus the U.S dollar as prices of commodities gold and oil which make up more than half the nation’s exports, held near 14-month highs. Crude oil, Australia’s 4th most-valuable commodity export, traded near a 14-month high yesterday, making a strong impact on the currency’s strength.
The Australia’s dollar gained 0.3 % against the European single currency and went below 1.60, the most since November 2007. The AUS/USD cross rose 0.2% to 91.38 from 91.19 when it reached 91.74 cents, the most since Dec. 14. The Aussie also climbed 0.6% against the Japanese yen to 84.15 yen.
Demand for Australia’s dollar increased after the Australian home-building approvals rose 5.9% in November, the Bureau of Statistics said today. Given a rise in commodities, higher equities and the Australian dollar’s yield advantage over other currencies, investors feel comfortable about buying the local currency.
The outlook for commodity prices in particular will be a key driver for sentiment toward the Aussie in coming months, according to analysts. The Aussie will likely be one of the best-performing currencies in the coming weeks, with potential price targets of 1.5602 and 1.5514 in extension.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
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