Analysis

Australian dollar's jump seen as temporary

The Australian dollar is continuing to climb in today’s trading session, following on from last Friday’s surge after news surfaced that a meeting between US president Donald Trump and his North Korean counterpart Kim Jung Un was due to take place in the nearest future.

The Aussie dollar has suffered in recent times as investors chose to avoid the riskier currencies in favour of the US dollar and Swiss Franc among others.

If the meeting goes well and North Korea agree to begin the process of denuclearization the Australian dollar is likely to fall further out of favor with the market and more losses are expected.

The latest jobs report released last Friday is also bound to put the Australian dollar under pressure because after the release, the chances of the US Federal Reserve hiking interest rates this month grew to over 90 percent.

The non-farm payrolls figure released to the market showed the number of new jobs added the US economy sharply increased by 313,000 in February, according to the US Labor Department which marks the biggest increase in over 1.5 years.

Apart from lifting rates this month, the news is bound to keep the Fed on track to lift rates a total of 4 times this year which will boost the US dollar at the expense of currencies such as the Australian dollar.

"Although the unemployment rate ticked up and average hourly earnings growth slowed, the most important takeaway is that these numbers are strong enough for the Federal Reserve to raise interest rates later this month," said BK Asset Management managing director of FX strategy Kathy Lien

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