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SYDNEY, Feb 1 Asia Pulse - The Australian dollar closed higher today after the United States currency fell in reponse to an interest rate cut there.
And Australian bond prices hit their highest levels in nearly two years, on fresh market expectations of a large domestic interest rate cut next week.
Evidence of further weakness in the US economy also supported the Australian currency's rally.
A bleak US gross domestic product (GDP) outcome overnight set the scene for the US Federal Reserve's announcement that official interest rates had been taken down by half a percentage point.
It was the second time in a month that the Fed cut by that much, and despite the fact that it had been expected, the announcement helped inject new life into the Australian currency.
At 1700 AEDT, the Australian dollar was at 55.18 US cents from 54.53 at the close yesterday.
From an early low of 54.45 US cents, the unit finished near its high of 55.27.
Source: HighBeam Research, FOREX - AUSTRALIAN DOLLAR CLOSES UP - FEB 1, 2001.