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Aussie Nears 3-Week High as Fed Bets Boost Risk Demand

The Australian dollar touched an almost three-week high as demand for riskier assets rose amid speculation the Federal Reserve will implement a third round of quantitative easing, or QE, at a meeting that begins today.

Australia’s currency gained against most major counterparts as Germany’s constitutional court is set to decide on the country’s participation in Europe’s bailout fund. The so-called Aussie and New Zealand’s dollar strengthened versus the greenback yesterday after Moody’s Investors Service said the U.S.’s Aaa rating may be cut. A private report today showed an improvement in Australian consumer confidence.

“If the Fed decides to conduct QE3 as the markets expect, it’s likely to lead to a risk-on sentiment,” Junichi Ishikawa, a Tokyo-based analyst at IG Markets Securities Ltd. said. “The Aussie and kiwi are supported on the back of the U.S. dollar’s broad weakness.”

via Bloomberg [1]

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