Australian dollar marches toward parity with US greenback
- The Australian
- October 07, 2010
- 3 comments
- Dollar nears parity with greenback
- Follows steady employment figures
- Bank pushes for interest rate rise
THE Australian dollar has soared to its highest level against the US currency since it was floated 27 years ago.
The dollar surged to US98.74 cents tonight after strong jobs figures pointed to a robust economy and raised the chances of an interest-rate rise as early as next month, The Australian reports.
The dollar has never reached parity against the greenback since it was floated by the Hawke-Keating government in December 1983. It last peaked at US98.49c in early 2008.
Some currency experts believe it could pass $US1 within days.
While the dollar rallied, Australian bonds sank on a surprisingly robust jobs report that defied market expectations.
Late this afternoon, market pricing for a November rate hike from the Reserve Bank of Australia surged to 60 per cent from 30 per cent after the data, with the market even likely to increase those odds in the next 24 hours, said Su-Lin Ong, senior interest rate strategist with RBC Capital Markets.
"It is quite possible that it could move further as into tomorrow, the risk is to the upside," said Ms Ong, citing a speech tomorrow by historically hawkish RBA Deputy Governor Ric Battellino.
Still, longer term, Ms Ong said late-October Australian inflation data and the US jobs report late tomorrow, could limit any more broad gains in rate-hike odds or big slides in bond prices.
In the interest-rate futures market, the three-year bond lost 14 ticks to 95.02, while 10-year bond futures lost four ticks to 94.925.
The Aussie dollar rose after official data showed the unemployment rate stayed steady at 5.1 per cent during September.
Read more: http://www.news.com.au/business/australian-dollar-marches-toward-parity-with-us-greenback/story-e6frfm1i-1225935558462#ixzz11fr2TzCN
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