FX currency Wars - Reserve Bank of Australia verbal intervention and no rate hike 5/10/2010 (update 3)

Next step, massive AUD selling by the RBA

The Age 6/10/2010

"The Australian dollar is unlikely to continue its rise against the US dollar once the North American economy recovers, a central bank official says.

Reserve Bank of Australia (RBA) Head of Financial Stability Luci Ellis says the poor strength of the US dollar is no surprise, given the weak US economy and labour market.

"The US economy is in a terrible state," she said during an address to CPA Australia conference in Brisbane.

"There's a question of whether the Australian dollar is high or the US dollar is low."

But Dr Ellis predicted once the US started to recover, the Aussie dollar's strength against the Greenback would weaken.

"Once things start to pick up and their dollar starts to recover, once their wages pick up again, that's part of the transition mechanism and part of the adjustment," she said.

"So I think you'll see that temporary boost will presumably dissipate."