Investors bought two- and three-month Aussie dollar calls against the U.S. dollar last week, struck slightly out-of-the-money. The moves followed Wednesday's 50 basis point rate cut from the Reserve Bank of Australia. Over the course of the week, the Aussie dollar rose to USD0.488 from all time-record lows of about USD0.4775 the previous week, according to an options trader in New York. With the cut in interest rates and the Aussie dollar slowly crawling out of the cellar, one-month vol last week fell about a percentage point, hovering around 16% as DW went to press last Thursday.
Marty Goodacre, v.p. of foreign exchange at Westpac Banking in New York, said he expected an upturn in the Aussie against the greenback in the near term. He sees the Aussie dollar trading around USD0.505 in the next several weeks. In general, "markets reward central banks who are proactive in cutting rates and encouraging growth," he said.
