AUD/USD up to 0.9375 as Volatility Drops

Australia’s dollar held the biggest gain in two weeks from yesterday before data today forecast to show the nation’s consumer prices rose.

Volatility among major currencies fell to the lowest since 2007, boosting the allure of higher-yielding currencies. Demand for the assets may also increase as economists estimate that a preliminary manufacturing index in China rose this month. The dollar was near a two-week high against the yen before reports on manufacturing and new home sales that will probably add to signs the U.S. economy is improving. The central banks in the U.S. and Japan will set monetary policy next week.

“Ranges are getting narrower in the Aussie, and it’s down to CPI and China flash PMI to give us some sense of a directional break,” said Robert Rennie, head of currency and commodity strategy at Westpac Banking Corp. in Sydney. “The underlying trend at the moment is still for a stronger Aussie.”

Bloomberg

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