Thursday, July 28, 2011

Commerzbank: Aussie is becoming the save haven

Australian dollar, one of the riskier currencies, has strengthened so far versus the greenback as investors have been using it as a refuge from US and European debt problems together with traditional safe havens such as Swiss franc and Japanese yen bought during the periods of risk aversion.

Strategists at Morgan Stanley claim that the market’s differentiating between currencies looking into the country-specific factors.

Strategists at Commerzbank claim that AUD is increasingly becoming an Asian safe-haven currency. This process is encouraged by the fact that Asian central banks sell US dollars versus Australian to stem the gains in their national currencies.

Among the factors that make Australian currency attractive for investors there are the nation’s top AAA credit rating by both Moody's Investors Service and Standard & Poor's and higher yields. Australia's CPI rose by 3.6% in the second quarter bring back the speculation about the Reserve bank of Australia’s potential rate hike.

It seems that Aussie’s highly sensitive correlation to investor risk sentiment has broken down and it’s returning to being driven by fundamentals.

daily audusd 11-32

Chart. Daily AUD/USD

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