Economy

Aussie dollar on the rise

The Australian dollar is expected to approach the US$0.77 mark next week, analysts say.

It continues the recent upward trend for the safe-haven currency, which had a recent peak just above US$0.78 in April.

Westpac Bank chief currency strategist Rob Rennie said several factors had caused the resurgence of the dollar since it hit a low of less than US$0.72 in late May.

“The S&P 500 is up about three per cent from the lows last week,” Rennie said.

“German ten-year government bond yields are back below zero and global commodity markets have rallied strongly.

“This improved sentiment has seen the Australian dollar recover through the week, starting on Monday morning below 75 cents.”

The Aussie peaked at $US0.7675 overnight and has been steady today.

But Mr Rennie warned other factors could hold the dollar back.

“Monday brings the first of the US presidential election debates and we’re also likely to have the date set for the Italian Senate referendum,” he said.

“Italy’s Prime Minister Matteo Renzi has already announced that if he loses that referendum he will resign and that could plunge Italy into political chaos as well.”

November is expected to be a turbulent month for global financial markets.

Reserve Bank of Australia Governor Phil Lowe appeared before the House Economics Committee to discuss economic movements last week.

Commonwealth Bank economist Kristina Clifton said Mr Lowe had indicated a continuity of Australia’s monetary policy, and presented recent economic developments in a positive light.

CBA chief economist Michael Blythe said Mr Lowe noted the actions of foreign central banks had an impact on exchange rates, including the Australian dollar.