The Australian Dollar rose to a 3 month high, being heavily supported by the expectation of another rate rise next month by the Reserve Bank of Australia. It has also been supported by the falling US economy, which is expected to continue its expansionary approach by cutting its interest rates, thus increasing the interest rate differential between the two countries. Traders have also resumed the carry trade in which they borrowed money from Japan and invested it in a country with a higher rate differential such as Australia or New Zealand.
''The Aussie will continue being supported by very hawkish expectations for the Reserve Bank of Australia. We fully expect a rate hike in March and then again in May,'' said RBC Capital Markets senior currency strategist, Sue Trinh.
In forex trading, the Australian Dollar has risen to a 3 month high at 92.72 US cents compared to yesterday's 92.44 US cents. It hit a 3 month high of 92.74 US cents, the highest since November. Australian Dollar traded at 62.60 Euros, up from 62.41 Euros.
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