Asia Times: Aussie dollar surges to 12 month high



	May 01, 1999	atimes.com

Oceania

Aussie dollar surges to 12 month high

SYDNEY - The Australian dollar has surgedto a new 12-month high, spiking above the 66 U.S. centlevel on Thursday night as renewed optimism over commodities and the worldeconomy sparked buying interest.

The domestic currency also received a boost from improvements in the price of gold and a skip in a leadingcommodities index.

The Australian dollar has not been at the 66 U.S. cent marksince April last year. The level of the dollar is strongly dictated by movementsin commodity prices and especially gold, which is Australia'ssecond largest export.

A foreign exchange dealer with an Australian bank Fridayattributed the interest in the Australian currency to arenewed bout of positive sentiment about the world economy.''We are seeing a continuation of that view of optimismabout Asia and world growth and commodity prices,'' he said.The United States was particularly interested in buying theAustralian currency, he said.

The Australian dollar opened in Sydney Friday at 65.98 U.S. centsafter hitting an overnight high of 66.02.The gains in the domestic unit coincided with a move byDeutsche Bank AG to upgrade forecasts for the unit.

''With the Australian dollar now approaching our three-monthtarget of U.S.$0.66, we have taken the opportunity to reviewour medium term forecasts,'' Deutsche Bank currency strategistTim Moloney said.''As a result we are raising our three-month forecast forthe Australian dollar to U.S.$0.68 and our 12-month target toU.S.$0.70.

''We now see the Aussie as within a broader 0.6300 to 0.6800range rather than the 0.6050 to 0.6550 range that has capturedits activity since last October.'' Deutsche released its upgraded forecasts late Thursday night.

Moloney said the market for the Australian dollar wasbetter balanced now than earlier in the year.''Global sentiment in favor of the currency also seems tobe better balanced, with both European and U.S. investors morepositive,'' he said.

Among the reasons for the upgraded forecasts were quickerthan expected trading partner growth, commodity pricesresponding to signs of stronger world demand and improvementsin regional stockmarkets flowing through into cyclical andresource stocks.Domestic monetary policy was also favoring a strongAustralian dollar.

The surge in the Australian dollar on Thursday night was supportedby an improved Commodity Research Bureau index (CRB) whichclosed in New York at 191.48, up 1.69.The CRB is an index of 17 U.S. futures markets and althoughnot weighted to Australia's exports, traders follow it as anindicator for the commodity price-sensitive Australian dollar.BR>
Also, overnight COMEX gold for current delivery put onU.S.$3.30 to close at U.S.$286.20.The Australian dollar also hit 0.4100 British poundsovernight, the first time it has been at that level in two months.

(Asia Pulse)