Bloomberg.com has an interesting article on how commodity sensitive currencies such as the Australian Dollar rose this week as there were speculations that cuts in global interest rates will revive investors risk appetite. Money.Cnn.com has an interesting quote by Robert Rennie - "But it feels like we've passed through the eye of the storm," said Robert Rennie, chief currency strategist at Westpac. "That's not to say there isn't another storm on the horizon, but for the moment the intense pessimism of October and November seems to have eased." Lets hope he is right, at least for now. He also expects the Aussie (Australian Dollar) to trade at 69.5 to 72.5 cents US in the coming week. The current trading value today is 70.4 cents US. The full article is available here. The primary reason for increase of the Australian dollar is the rise in the price of gold, which is the country's 3rd most valuable export. As the commodities market has been relatively stable for the last few months, this has contributed to pushing the Aussie upwards. Also, it is expected that there will be a huge cuts in interest rates. The benchmark being around 4-4.5% in Australia, .1% in Japan and almost a near 0% in the US. In related news, the Canadian dollar or the Loonie had its all time worst valuation this year since the 1860's. Canada.com has the full news here. I feel this is a good time to remember what exactly caused this downturn, speculations and pessimism which has resulted in all markets becoming unpredictable. Here is a good summary of the history of the recent financial crisis. Lets hope the world economy and markets are back to normal soon.
