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Australian dollar up on rate delay

The Australian dollar is trading higher today after expectations from a growing number of analysts that the US Federal Reserve would hold off lifting interest rates after another round of disappointing data.

The local currency hit a high of US81.61c today up from US 81.10c in yesterday’s trade.

US retail sales came in last month at 0.1% against analysts’ expectations of a 0.5% rise leading some to believe that the US Fed may even delay a rate rise until next year,

"Hopes for a strong rebound are now fading. The likelihood of a near-term Fed action is almost zero now," said Thomas Costerg, an economist at Standard Chartered Bank in New York.

BK Asset Management managing director of FX strategy Boris Schlossberg noted that the US central bank will play a wait and see game and will not make a move until it sees some sort of improvement in the numbers,

 "The market is basically convinced that the Fed is not going to do anything until the consumer shows some strength". He said

Also helping to drive the local currency higher was the recovery in the Iron ore price, Australia’s biggest export that is trading at around US$63 a tonne, hitting its highest level in 2 months.

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