AUD Resilience Confuses Investors

The resilience in the Australian dollar in recent times may have confused some investors, given worries over the health of China – Australia’s largest trading partner – but investment bank Morgan Stanley says the upward momentum should remain intact for a while.
The Aussie jumped to its highest levels in four months against the greenback Tuesday to $0.9310 after the Reserve Bank of Australia left interest rates unchanged at a record low of 2.5 percent.
The currency is now up 3.7 percent year to date against the U.S. dollar, despite a string of disappointing data out of China both on the manufacturing and trade fronts.

In a note entitled “AUD: Why so strong?” Morgan Stanley says there are a number of factors drawing investors to the Aussie dollar -in particular, the revival of overseas investor appetite for the Australia’s government debt.
They attribute this shift to the fact that the Australian government has returned to printing a lot of new debt, posting a record 23 billion Australian dollars ($21.2 billion) of net bond issuance in the first quarter of this year. This coming after five quarters of little net buying.
Japanese investors led the trend, said Morgan Stanley, buying 5.4 billion Australian dollars in government bonds in the four months to January, having sold 34.2 billion Australian dollars in debt during the 11 consecutive months to September 2013.

via CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.