The Australian dollar held near 15-month highs on Monday, supported by a struggling US dollar, record high gold prices and gains in regional stock markets. The Aussie stood at $0.9348, up nearly a cent from the $0.9255 late on Friday and within sight of a 15-month high of $0.9370 hit on Thursday, with the currency in broad demand from US banks to pension and insurance funds.
"There's buying across the board," said Tony Darvell, a trader at Easy Forex. "People are looking at the weak US dollar and record gold prices." With a buoyant local outlook of rising interest rates and strong economic growth, and a resilient Chinese economy that would support commodity prices, National Australia Bank predicted the Aussie may hit US $1 by March. "There's a lot which needs to go right but there's a very good chance it will," the bank said in a note to clients.
NAB expects the Aussie to rise to $0.97 by the end of 2009, and hovering between $1-$1.03 in 2010 - among the more upbeat Aussie forecasts in Australia. Spot gold prices hit a record high on Monday as investors hedged against a weak US dollar while Asian stocks edged up, helped by upbeat reports from US retailers.
Among the highlights for local trade this week is the Reserve Bank of Australia's Tuesday release of its minutes for the November 3 policy meeting, when it raised rates by 25 basis points to 3.50 percent. Investors will look for clues about whether the RBA will raise rates again in December, or perhaps even accelerate the speed of tightening next year. For now, markets are betting on a 78 percent chance of a 25-basis-point rise in December.
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