Australian Shares Hit 5 Year High on USD Weakness

Australian shares climbed to a five-year peak on Monday, taking cues from the U.S. S&P 500’s .SPX record high as investors bet the Federal Reserve will extend its cheap money policies into next year.

The change in expectations followed a 16-day shutdown of the U.S. government that could cloud the economic outlook and make the Fed wary to scale back its $85 billion a month bond-buying program this year as many had expected. This kept the dollar on the back foot.

Investors face a deluge of U.S. data this week as government departments reopen, with the September nonfarm payrolls report due on Tuesday.

“Such strong readings would again ignite a debate on an imminent start of U.S. tapering, but given that the full impact of the recent shutdown may take some further time to emerge, we continue to see tapering in first quarter next year,” analysts at Societe Generale wrote in a note.

Australian shares .AXJO scaled a five-year peak, while MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched up 0.2 percent to a five-month high.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza