The risk trade was alive and well earlier today on the hopes of economic recovery. While the excitement has subsided a bit on news out of the U.S. (and as global equities tank), there is still some speculation that the Australian dollar forex trading forecast will lead to strength.
Right now, China is increasing its demand for commodities, and that is providing some help for Australia, which is a major partner with China. GFT's Boris Schlossberg reports in FX360 that the Aussie may see an increased yield advantage soon as well:
As we noted earlier, “With Australian yields already the highest amongst the industrialized nations (currently at 3%), a move towards tightening by the RBA will attract even more capital into the currency as carry traders try to profit from rate differential especially against the US dollar and the yen. With little resistance to stand in its way, the unit could target the .9000 figure over the next several sessions if risk flows prove supportive.”
With forex traders looking for better returns, and experiencing less risk aversion, it is little surprise that the Australian dollar forex trading forecast is starting to look stronger.
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