Aussie Gains on Outlook for Rates & Ireland’s Bailout

The Australia dollar rose today as the speculation about the possible bailout for Ireland increased demand for the higher-yielding assets, increasing the bets on the rates hike by the central bank.

Ric Battellino, the Deputy Governor of the Reserve Bank of Australia, said that the inflation pressure will likely persist. He stated that “over the next couple of years as a result of the resources boom, the challenge will be to manage the economy in a way that keeps economic growth on a sustainable path, with inflation contained” and that the strength of the nation’s currency is “a natural consequence of a resources boom and, at the aggregate level, is helpful in allowing the economy to adjust”.

The speculation about the Ireland’s bailout really spurred the markets today. The Standard & Poor’s 500 Index rose as much as 1.7 percent. The MSCI Asia Pacific Index gained 1.1 percent after four days of losses. It’ll be interesting to see how long the optimism will persist.

AUD/USD rose from 0.9794 today as of 23:40 GMT. EUR/AUD went down from 1.3807 to 1.3786. AUD/JPY rallied from 81.47 to 82.62.

If you want to comment on the Australian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.