Australian Dollar, Korean Won Rise: Euro Falls on Further Easing

Australian dollar rallies as RBA leaves rates unchanged

The Australian dollar rallied versus the US dollar on November 3, 2015, as the RBA (Reserve Bank of Australia) kept rates unchanged at a record low of 2%. The RBA stated that credit conditions remained accommodative, even as mortgage rates have been scaling up. It maintained that a weak Australian dollar was helping to balance the economy’s reliance on non-mining sectors.

Inflation, unemployment reports to guide further policy decisions

RBA Governor Glenn Stevens maintained that further easing can be done in case the outlook for inflation deteriorates and a monetary support is needed from the central bank. However, the RBA believes that the prospect of a recovery in business confidence and economic conditions was picking up through development in the United States and Europe, even as a slowdown through Asia and other emerging markets remains prevalent. The unemployment report due next week will guide further policy decisions by the RBA on further easing in interest rates.

Impact on the market

Australian ETFs were on a positive trend, with the iShares MSCI Australia ETF (EWA) rising 1.8% on November 3, 2015. The rise in the currency ETF, the Guggenheim CurrencyShares Australian Dollar ETF (FXA), was less compounded at 0.76%.

Australian ADRs (American depositary receipts) trading in US markets were on a positive trajectory. BHP Billiton (BHP) rose 2.6%. In the mining sector, British-Australian multi-national Rio Tinto (RIO) was also trading positively with an upward move of 0.72%. Westpac Banking (WBK) was trading higher with a rise of 1.7%.

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Browse this series on Market Realist:

• Part 2 - Korean Won Appreciates on Higher Inflation Report
• Part 3 - Euro Falls as Draghi Comments on Further Easing