AU Dollar at 23-Year High

November 9, 2007 - The Australian wool market has had another strong week despite the Australian dollar remaining at a 23-year high against the U.S. dollar. The Wool Exchange's Eastern Market Indicator closed on Thursday at 959 Australian cents per kilogram clean, up 0.6 percent (6 cents) on last week.

In U.S. cents, the market fell by just 1 cent, with the Australian dollar peaking at 94 U.S. cents, following the expected 0.25 percent interest rate rise announced by the Reserve Bank of Australia (RBA). With the RBA highlighting underlying inflation pressures, as well as pointing to faster growth in demand and output, some financial experts are suggesting that a further rise in rates could come as early as December. This, coupled with further predicted drops in U.S. interest rates, means that the Australian dollar is expected to rise again over the coming weeks.

The wool roster forecast for the next four weeks is 14.3 percent down on the same period last year. As the market continues to be largely supply-driven, further increases in Australian wool prices are expected between now and the end of the year. Chinese buyers are thought to be keeping wool in stock for January delivery due to the expectation of rising prices in the coming weeks.
Reprinted in part from The Wool Record Weekly

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