The Australian dollar will rise to a record and exceed parity with the U.S. currency as low volatility and the widening yield advantage boosts demand for the so-called Aussie, Commonwealth Bank of Australia said today.
Australia’s dollar fell, paring its first five-day gain in three weeks, while the New Zealand kiwi slid after the central bank governor said the currency’s level is a headwind for growth and unsustainable in the long run.
The Australian dollar rose against all of its major counterparts after a report showed bigger-than- estimated growth in employment, reducing pressure on the central bank to expand monetary easing steps.
Richard Grace, chief currency strategist and head of international economics in Sydney at Commonwealth Bank of Australia, comments on the dollar and yen after Japan intervened to stem gains in its currency.
The dollar fell after touching its strongest level versus the euro since December as European leaders debate loosening the shackles on national budgets to address economic weakness amid the region’s debt crisis.
The euro declined against the dollar for a third day after Standard & Poor’s cut Italy’s credit rating, adding to concern Europe’s debt crisis will raise borrowing costs for the region’s largest economies.