Dollar hits 2-year high
Shares rise as currency tops 80 USc mark
THE Australian dollar has soared passed 80 US cents for the first time in more than two years as diminished expectations for rate hikes in the US dented the greenback.
The share market also rose as stronger iron ore and copper prices boosted mining stocks.
The local currency hit a high of 80.66 US cents, its best value since May 2015, after the US Federal Reserve suggested it was in no hurry to raise interest rates.
CMC chief market analyst Ric Spooner said the Aussie dollar was also boosted by higher commodity prices.
“In the last 24 hours this has been about the US Fed statement,” he said. “What’s got the market going is that they (the Fed) have changed their wording a little bit to reflect the reality that inflation is remaining low and that has seen the market wind back their pricing for another rate hike by the Fed.”
Australian Industry Group chief executive Innes Willox said the current value of the Australian dollar was outside the comfort zone for manufacturers and businesses in tradeexposed industries.
“There is no single magic Australian dollar value that is perfect for all Australian businesses, but at 80 US cents or less, close to 90 per cent of Australian manufacturers say they can compete in export markets and 70 per cent say they are competitive against imports,” Mr Willox said.
The Australian dollar was at 80.38 US cents yesterday afternoon, up from 78.91 US cents Macquarie chairman Peter Warne speaking at the company’s annual general meeting on Wednesday. On the share market, the benchmark S&P/ ASX200 index rose 0.15 per cent to 5785 points – its thirdstraight session of gains.
BHP Billiton added 1.1 per cent, Rio Tinto was up 0.6 per cent and South32 added 2.1 per cent. Fortescue Metals dropped six cents, or 1.1 per cent, to $5.24, after the iron ore miner said it expects to trim its costs further this year and is targeting similar iron ore shipments to the financial year that just ended.
The major banks were relatively steady, with Commonwealth Bank up 0.3 per cent, ANZ and National Australia Bank each up 0.1 per cent, and Westpac down 0.2 per cent.
Macquarie Group firmed $1.04, or 1.2 per cent, to $87.37 as it said it expected to make another annual profit of around $2.2 billion.