Saturday, March 12, 2005

Australian Dollar Rises on Expectation Rates Will Increase

Speculation that another Rate rise is imminent

The Australian dollar posted a second weekly gain amid speculation the central bank will raise interest rates after a report this week showed the economy added jobs for a sixth month.

The currency has gained 1.3 percent since the Reserve Bank of Australia raised interest rates on March 2 for the first time in 15 months citing concerns labor shortages will stoke wages and inflation. Rising prices of commodity exports such as gold also spurred buying of the Australian dollar this week.

The unemployment report firms the notion of RBA tightening in April and we expect that reality to continue to support the Australian dollar,'' said Craig Ferguson, a currency strategist at Australia & New Zealand Banking Group Ltd. in Melbourne.

Futures traders increased bets the central bank will raise its 5.5 percent overnight cash rate target by midyear after the government on March 10 reported the economy added 20,000 jobs last month. The jobless rate stayed at a 28-year low of 5.1 percent.

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