The Australian dollar is up to a flying start this year, outperforming all the other major currencies so far. It traded at its highest level of the month so far on Thursday, when it hit US75.1₵, after Donald Trump uncharacteristically failed to expatiate on his economic stimulus package during his latest press conference. The Australian Dollar has gained 3.6 percent this year, to the dollar. But the best is yet to come, as economists at ANZ believe it could reach US78₵. Compared to other markets, the Aussie dollar has gained 5 percent against the pound, 3 percent against the euro, 1.9 percent over the Japanese yen, while having a minor increase of 1.35 percent over their former neighbours.
NAB’s co-head of FX strategy, Ray Attrill believes the Aussie dollar has been undervalued. For the past 6 months and it is time for a path-correction. “Rather than just saying it’s a [US] dollar thing, which to some extent it is, it does suggest that the Aussie was beaten up unjustifiably,” said Attrill. Mr Attrill did clarify that the currency could seriously be hurt by the US dollars. “It only needs Trump to say: ‘I’m going to unveil plans for major infrastructure spending next week’, and then you’ll see the US rates market selling off and the US dollar will start strengthening again and the Aussie will probably become weaker,” he added.
“Everybody thinks politics is more important than hard economics at the moment.”