Why is Australian dollar so strong?
About the author:
- Author name:
- By Michael Knox
- Job title:
- Chief Economist and Director of Strategy
- Date posted:
- 25 June 2020, 10:02 AM
In this dial-in, I comment on recent inquiries regarding the Australian dollar, particularly referencing its strength.
I comment on the Federal Reserves most recent aggressive cuts, follow that effect onto our local currency.
"The rally in the Australian dollar between March and June 2020, demonstrates that sometimes things in economics can work exactly the same as they do in theory. Aggressive cuts in the Fed's fund rate, by the US Federal Reserve had lead to a situation where US bond yields fell dramatically relative to Australian bond yields. This yield advantage then caused a rapid recovery in the Australian dollar which has occurred since March. That rally seemed to be followed by a pause..."
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