Australia’s dollar rose to a three-month high while the nation’s bonds surged amid speculation Federal Reserve Vice Chairman Janet Yellen will become the next head of the U.S. central bank and maintain stimulus that’s supported risk assets worldwide.
The currencies of Australia and New Zealand strengthened versus most of their major peers after former Treasury Secretary Lawrence Summers withdrew his name from consideration to be the next Fed chairman. The Aussie and kiwi gained against the yen after the U.S. and Russia agreed on a plan to eliminate Syria’s chemical weapons, supporting demand for higher-yielding assets.
“I’m a bit more upbeat on the Aussie purely from a dollar point of view,” said Robert Rennie, the chief currency strategist at Westpac Banking Corp. (WBC), Australia’s second-largest lender. “What you have to read into the market’s move is that this is a combination of Summers and Syria, but it is a risk-positive story.”
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