THE Australian dollar has hit a two-month high following a strong bounce back in commodity prices.
At 0700 AEDT on Tuesday, the local unit was trading at 72.28 US cents, up from 71.74 cents on Monday.
Bank of New Zealand currency strategist Jason Wong said hard commodity prices had surged in the past 24 hours.
“Oil prices were up in the order of five to six per cent, iron ore prices are up about six per cent and copper rebounded,” he said.
The positive global mood helped commodity currencies like the Aussie overnight, which soared to 72.47 US cents at one point.
Mr Wong said an International Energy Agency report released overnight predicted US shale oil production to fall by 600,000 barrels per day in 2016.
“The market took that as positive news, even though supply and demand won’t rebalance until 2017,” he said.
Ongoing negotiations between Russia and Saudi Arabia on a potential production freeze were also continuing this week, Mr Wong said.
“That’s probably prevented some of the short sellers from entering the oil market,” he said.
“And China loosened some tax restrictions on buying housing, that gave another boost to commodities overall.”
CURRENCY SNAPSHOT AT 0700 AEDT ON TUESDAY
One Australian dollar buys:
* 72.28 US cents, from 71.74 cents on Monday
* 81.55 Japanese yen, from 81.00 yen
* 65.57 euro cents, from 64.56 euro cents
* 107.75 New Zealand cents, from 107.68 NZ cents
* 51.09 British pence, from 50.22 pence