Wednesday, 5 February 2014 00:08
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Reuters: The Australian dollar surged almost 2% on Tuesday after the country’s Central Bank dropped its bias towards easing interest rates and toned down its long-term call for the currency to weaken.
The dollar, yen and euro were all broadly stable, reflecting a drop in the volatility that has accompanied the flood of money out of emerging economies in search of traditional safe havens in the developed world.
The Aussie has fallen by almost a fifth in the past 12 months as a commodities boom expired, growth in China began to slow and the central bank campaigned for a weaker currency to help stir economic growth.
Some strategists have begun to turn more positive and there has also been talk in the market of Chinese investors buying the Australian currency at the start of the Year of the Horse. But the Reserve Bank of Australia’s signals on Tuesday were a surprise to many.
The Aussie’s jump – as much as 1.8% against the greenback – came as the yen eased back from a two-month high versus the US dollar, though its losses were tempered by fragile sentiment after a disappointing reading on US factory activity stirred concerns about the growth outlook.
