AUD/USD rallied above 0.9300 overnight
27 February 2008
The AUD/USD rallied above 0.9300 overnight for the first time since early November. The traded high was 0.9333. The weak USD was the primary driver as it fell to record lows against the EUR and subsequently pushed the NZD to 23 year highs.
The catalyst for USD weakness were comments from US Fed Vice Chairman Kohn, that implied further interest rate cuts are to come. He said the danger the US economy will weaken further is a bigger worry than higher inflation, and that the Fed has the tools (ie interest rate cuts) and is ready to do what it needs to do to respond to difficult times.
These comments were made in spite of a US PPI (Producer Price Index - a key compnent of CPI) came in considerably higher than forecast (+1.0% versus 0.4% consensus) for January. The AUD/USD is closing in on the 24 year high of 0.9401.