Fundamentally, demand for the Aussie was fueled today by the RBA statement after leaving Central Bank Interest Rates at 2.5%. The Reserve Bank’s move towards a neutral monetary stance following its board meeting on Tuesday could see interest rates rise for the first time since 2010 this year.
The central bank, which met on Tuesday after a two-month hiatus, released an extensively revised statement that was widely interpreted as a shift away from its previous mild easing bias.
RBA Governor Glenn Stevens said in the statement that “on present indications, the most prudent course is likely to be a period of stability in interest rates”
“More rate rises are likely to follow in early 2015.” Commonwealth Bank senior economist John Peters said.
Technically, a possible reversal is building up on the Australian Dollar against other currencies on board due to the rumor, as the single currency is gathering momentum. I implore investors holding long term positions against the Australian dollar to apply caution on present open deals.