Holding the Australian dollar can be a risky proposition at the moment judging by today’s volatility which saw the currency bounce all over the place before ending up not far from where it started the trading session.
In the early Asian trading the Aussie dollar surged through the US77c mark on the back of local CPI figures which hit the market at 0.7 percent against expectations for a figure of 0.4 percent while the yearly figure came in at 1.3 percent, well above the expected figure of 1.1 percent.
The Major reason for the jump was speculation that with such strong inflation figures the RBA would hold off cutting rates further until late 2017 or may even be done with this rate cutting cycle.
But no sooner had the currency reached a high of US77.08, the bears stepped in and pushed the Aussie down to US76.44 as of 6.40pm (GMT) on the back of weaker oil prices and strong data from the US.
Data out of America showed the US services sector jumped in October with the preliminary Services PMI Index coming in at 54.8, well up from the September’s figure of 52.3 and well above analysts’ predictions for a figure of 52.3.
The data gives more reason to the US Federal reserve to lift rates in December which is a burden for the Aussie dollar as the narrowing gap between interest rates lessens the attractiveness of the carry trade.