Time to Buy Australian Dollar?

It may be a very good time to invest in the Australian dollar, as it's coming off a recent low and has rebounded in a way that looks very sustainable.

The last time the Aussie dollar came off a low in the latter part of 2008, it almost doubled in value.

Another reason to invest in the Australian dollar at this time is it's out of favor at this time, which means it hasn't participated in a huge run up as happens once traders take notice of a currency moving up in value. At that time all you're doing is chasing the price. Better to get in before the crowd discovers it.

Added together, the price of the Aussie dollar is inexpensive, starting to sustainably trend upwards, and is still out of favor with traders and investors.

Since the currency is still hated, and the upwards trend solidly in place, it's the perfect time to get into the currency.

As for the Aussie dollar itself, it pays out 3.7 percent interest at this time, the leader among of all the major currencies.

One of the best ways to play the Australian dollar is via the CurrencyShares Australia Dollar Trust (FXA). It pays out a monthly dividend valued at 3.7 percent.

US Dollar Down on Risk Appetite

The US dollar continues to move up and down with the risk flavor of the day, as today it was a move by traders to being more risk oriented, and consequently the greenback fell in value as a result against other major currencies.

Currencies linked to commodities peformed against against the US dollar, while the British Pound weakened against the dollar.

While the UK isn't focused on as much in relationship to the European Union because they still have their own currency, it is in danger of losing its AAA debt rating according to Fitch Ratings, as their slow response in implementing austerity measures is causing investors to lose confidence in the Pound.

The Canadian, Australian and New Zealand dollars did well today because of their link to commodities, after taking a beating lately because of risk concerns related to raw materials.

US Dollar Lowest Against Yen in 13 years

Although the U.S. dollar has been the beneficiary of the forced liquidation of commodity positions which are for the most part denominated in U.S. dollars, it hasn't been because underlying fundamentals have changed, as its drop against the yen has proven. Today the dollar fell to a 13-year low against the yen, dropping to 90.89.

It has rebounded some since then, but it does show that the yen is behaving like the fundamentals connected to it, while the dollar isn't because of the forced liquidation mentioned above.

Still, the remarkable factors in the market keep the dollar high against other nations' currencies, as it was up to two-year highs against the euro, while it enjoyed a six-year high against sterling.

Sterling fell to as low as $1.5270 against the U.S. dollar, while the euro was as low as $1.2498. The Australian and New Zealand dollars also plunged against the greenback, with the Australian dollar taking the biggest hit, falling by 7.6 percent to $0.6213, while the New Zealand dollar was right behind it, decreasing by 6.5 percent to $0.5576.

U.S. Dollar Makes Solid Gains against Major Currencies This Week

The U.S. dollar continued to strengthen, as it gained again against the euro, yen, Swiss franc and Australian dollar over the week.

With the problems in the credit market looking like the worst may have passed, and the job data from the US Labor Department far better than expected, with a loss of 20,000 jobs versus the expected 80,000, investors are gaining optimism about where things are heading.

Unemployment for March also fell, dropping from 5.1 percent to 5.0.

All of this may indicate that while the slowdown will continue, it's dropping in speed, and may be close to plateauing.

Another factor was the expected quarter-point rate cut by the Federal Reserve, which seems to confirm things are getting better, which will help the dollar strengthen.

One concern is whether this will have a negative impact on manufacturing jobs in the U.S, which while declining some, it's nowhere near what it would be if the dollar starts to significantly strengthen. The weaker dollar has kept exports high, and helped keep the industry from losing too many jobs.

Volatility Should Continue for U.S. Dollar

The U.S. dollar was mixed today, as it fell strongly against the Canadian and Australian dollar, and the British pound.

It did manage to gain against the euro based on Eurozone Retail Sales, which fell by 0.5 percent. It also gained strongly against the New Zealand dollar, as the ANZ Commodity Price index reached a record high.

We'll get a better picture of the effects on the U.S. dollar with the various reports set to be released on Friday, as Non Farm Payrolls figures will come out, followed by Non Manufacturing Payroll and the Unemployment rate.

A report on the Average Hourly Earnings will also be released, giving a snapshot of the overall, general economic picture.