Will the Australian Dollar Hit Parity?
John Kicklighter, Currency Analyst and Jamie Saettele, Technical Currency Strategist firstname.lastname@example.org
2008-05-21 19:08 UTC (GMT)
Who could have imagined that the value of one Australian dollar could be equal to one US Dollar? As recently as the beginning of this year, parity or an exchange rate of 1.0 still seemed like a far fetched idea because at the time, the Australian dollar was trading at 0.88 against the US dollar. Five months, 800 pips and 9 percent later, the AUD/USD is now within an arms reach of parity. Both the Canadian dollar and Swiss Franc have taken a stab at the same price level in the hopes of becoming more valuable than the US dollar, but only one of these currency pairs have been managed to be successful.
What is most impressive about the Australian dollar’s rally is the fact that it is coming at a time when the US Federal Reserve has reached the end of its monetary easing cycle. The AUD/USD pressed on to a new 24-year high above 0.96 thanks to rising commodity prices, a roaring economy and favorable yield differential. The big question now is if a move to parity is a done deal.