Aussie Dollar Surges To 2-Year High

Ivan Schwartz
July 17, 2017

The Australian dollar closed at its highest level for more than 2 years overnight Friday of 78.38 USA cents, boosted by weak data in the U.S. which has cast doubt on the Fed's current interest rate policy.

WASHINGTON (AP) - Lower costs for gas, airline tickets, new and used cars and wireless mobile phone plans kept USA consumer prices flat in June, evidence that inflation remains muted.

Spot gold eased 0.1 percent to $1,215.67 per ounce at 0107 GMT but was up 0.3 percent for the week so far.

At the same time as today's PPI data, we get initial jobless claims and Canada's new house price index. It was poised for a weekly gain of 1.3 per cent, the biggest since mid-May. He said he thinks the Fed needs to focus on unwinding its balance sheet rather than raising rates again this year.

Friday's "data reaffirms the delay", he said. "We're seeing precious (prices) buoyed on the back of that".

Gold prices drifted lower in U.S. trading on Thursday as the dollar stabilised and global bond yields moved higher, although there was support on approach to the $1,215 per ounce level. The contract finished the week up 1.5 per cent, its first gain in six weeks. A stronger US currency weighs on gold, making the dollar - p riced commodity more expensive for non - USA investors.

Investors see a less than one-in-two chance of another hike this year according to pricing in federal funds futures

"The key level is US$1,230 on gold".

"We expect the Federal Reserve to lift its policy rate further later this year and to begin to reduce its balance sheet, both of which should strengthen the Dollars relative to the AUD", Mr Bloxham said.

Holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust GLD, fell 0.43 per cent on Thursday from Wednesday.

"A move above US$16.20 could trigger quite a bit of accelerated buying from the funds", he said.

New Zealand's two-year swap rate rose 1 basis point to 2.26 while the 10-year swaps rose 3 basis points to 3.35 percent. Platinum rose 1.68 per cent at US$916.65 per ounce, set to end the week up 1.5 per cent.

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