All thanks to the petty American politics being played out by the big orange man, the Australian dollar has soared to its highest level in over two years.

Yeah, dude.

But there was another reason for its sudden rise in popularity.

The minutes of the Reserve Bank of Australia’s (RBA) July monetary policy meeting had “optimistic overtones,” reports The Sunday Morning Herald (SMH), in which:

…the board stuck with its “glass half-full” view of the local economy, repeatedly underlining the “positives” in the outlook. But it also surprised by discussing the level of an appropriate neutral interest rate, which could be seen as a sign the central bank is mulling a rate rise.

Officials revealed that they now believe a cash rate of 3.5 per cent – well above today’s 1.5 per cent – would be a rate level that neither stimulates the economy nor holds it back.

In reaction, SMH reports that:

[T]he Aussie dollar jumped more than 1 US cent to as high as US79.04¢, its highest level since May 2015, after rallying 3 per cent last week.

“The neutral nominal rate, not unlike the Fed’s 3 per cent long-term interest rate projection, is a long way higher than where the market is currently trading, hence the negative reaction at the short end of Australian rates and the bid for the Australian dollar,” NAB chief economist markets Ivan Colhoun said.

I know, it sounds like the kind of thing that only those in the trade might understand, but here’s a graph that makes the point.

A look at the AUD/USD Five-Minute chart:

Wowzers.

The Aussie dollar has found plenty of willing buyers to propel it to the highest level since May 22, 2015.

Over the short term, the Aussie dollar is tipped to hold onto its gains and could well push higher still.

Time to buy, time to sell, time to worry? If you do business with ‘Stralia, and this has made things a little more complex, you should deal with Currencies Direct to assist you with all your foreign currency needs.

With a handle on international markets, you can get the best out of dealing with foreign currencies, as well as get assistance with everything, from forward contracts to managing foreign exchange exposures and risks – sounds lovely, doesn’t it?

So while the Aussie dollar is flying high, its market is a little volatile at the moment. Good luck playing the market.

[source:businessinsider&smh]