Aussie Appeal Growing among Traders and Central Banks

(eToro Blog) Australia is one of the few countries that have been able to retain its AAA credit rating despite a slowdown in global growth, a downtrend in commodity prices and its own diminished outlook. Its currency also remains remarkably resilient, if not somewhat overvalued, according to some analysts. Regardless, central banks’ purchases of the Australian Dollar have increased in recent months, with the Russian central bank adding the Aussie Dollar to its foreign reserve mix, to the tune of AUD$5 billion. Earlier in the month, it was rumored that the German Bundesbank was looking at including Aussie-dollar denominated assets as part of its forex strategy.

The increased demand for the Aussie Dollar has given rise to the question is the currency headed for safe haven status? One currency strategist suggests no, at least not in the traditional sense as the country still has a fairly large deficit of their current account. But where the country excels is in its ability to attract capital inflows to finance that current account.

But the real roadblock which will keep the Aussie from becoming a “true” safe haven currency stems from its symbiotic relationship with China, its key trading partner, thus analysts say it will never really shed its status as a higher risk currency. Unlike true safe haven currencies such as the Swiss Franc, Japanese Yen and the U.S. Dollar, the Aussie Dollar has distinct vulnerabilities, i.e. to China and commodity prices, that the real safe havens can shrug off.

The AUD/USD pair is trading higher at 1.0043, at the high of the day’s trading range which began at 1.0016 and 1.0043; as of this writing, sentiment on OpenBook is primarily bearish, with 52% of traders selling against 48% buying. OpenBook trader Kent1688 has closed several positions in the AUD/USD pair over the past 24 hours, both longs and shorts, with profits which range from 2.70% to 8.00% for the shorts, and 5.56% to 9.0% for the longs. Over the past month, the trader has fully allocated his portfolio to the AUD/USD pair with a gain of 0.6%.

OpenBook trader meenakshi10 from India closed out a pair of profitable shorts over the past day, with an average gain of 11%. The trader, who has 515 followers and 45 copiers as of this writing, has allocated 31% of the trading portfolio to the AUD/USD, with a gain in the quarter 12.6%, second only to a 16.6% allocation in the NZD/USD, which gained 12.7%. The trader has had a profitable trading year, as the statistics bear out. From the last week to the last 12-months, the trader’s statistics have steadily improved, from 4.9% for the week, to 18.4% for the month, 99.2% for the quarter, 107.3% at 6-months and 147.9% at 12-months.

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