The Australian Dollar is higher, trading at its peak level in a week as investors were enticed to the nation's government bonds, offering the widest yield margin over US Treasuries since December 1990. The yield gap between Australian and US two-year benchmark government bonds has doubled the past three months to 4.86 percentage points, the highest in 17 years. Investors also found the Australian Dollar alluring as the Reserve Bank of Australia (RBA) mentioned that it is likely to raise borrowing rate again from an 11 year high in order to stop inflation from going out of control.''The Australian dollar continues to stand out given its rate spreads,'' said David Watt, a senior currency strategist at RBC Capital Markets in Toronto.
In forex trading, the Australian Dollar is higher as it traded to 90.59 US cents before trading at 90.45 US cents. The Australian Dollar is higher, also due to the fact of its widening interest rate differential against the US Dollar with the US Federal Reserve slashing its borrowing rate by 125 basis points last month. Another rate rise may also add to the falling appeal of the carry trade, which has been unwinded recently due to jitters in the world's financial markets.
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