The Australian dollar extended its year-long rally after the Reserve Bank of Australia (RBA) raised its key interest rate by 0.25% to 3.25% on Oct. 6. The departure from interest rate policies of other central banks around the world created a boost in the Australian currency. Analysts see no reason for the Aussie’s run to stop.
“You’re going to see the Australian dollar outperform all of the major currencies for the next couple of months, probably a new trend that will become a much bigger one,” says Kathy Lien, director of currency research at GFT, adding that there’s an expectation for more rate hikes from RBA before the end of 2009. She expects the Aussie dollar to reach 95-97 cents before the end of the year.
Mike Zarembski, senior commodities analyst at optionsXpress, says the Aussie dollar may be the next currency that will reach par with the dollar, expecting it to reach 91-92 cents by the end of the year.
Dan Cook, senior market analyst for IG markets, agrees. He expects the Aussie dollar to reach 98 cents by the end of the year. “It doesn’t look like the fundamentals are going to shift on it. Their economy looks so much more stable [than the U.S.]. From a technical and fundamental basis, there’s no reason to believe that the Aussie’s going to divert from this course for the foreseeable future,” he says.