WSJ:Australian Dollar Up Late, Boosted In Part By Stronger Stocks
Rates At 0555 GMT
Latest Change
AUD/USD 1.0489 +0.09
AUD/JPY 80.42 -0.09%
6.50% May, 2013 3.7636% +0.05
4.50% April, 2020 4.4166% +0.001
10-Yr Spread To U.S. +224 bps Unch
SFE Sep 3-Year Futures 96.17 +0.01
SFE Sep 10-Year Futures 95.505 +0.005
SYDNEY (Dow Jones)--The Australian dollar strengthened on Wednesday, boosted in part by an improving stock performance in Australia.
Despite the gains, however, traders and analysts noted that more increases might not be in the cards in the coming days as global risk tolerance remains low and resistance looms close for the currency. In addition, Nick Socratous, head of global foreign exchange for HSBC Australia, said a bounce back in the currency in recent days appears to be slowly running out of steam.
"The best thing we can look at is the technical picture, it went down 10% last week and we have retraced half of that. Above US$1.05 it will encounter some resistance," said Socratous.
At 0555 GMT, the Australian dollar was at US$1.0489, up from US$1.0474 late Tuesday. Against the Japanese yen, the Australian dollar was at Y80.42, up from Y80.495.
Socratous added recent buyers have cited "the same old reasons to buy, yield and the China commodities story."
For the Australian dollar to push higher and breach US$1.0500, it will require a sharp paring of bets that the Reserve Bank of Australia will ease policy and improved sentiment on global growth prospects, said John Kyriakopolous, head of forex strategy at National Australia Bank.
"While investors worry about a sharp global economic slowdown, they are likely to continue pricing in RBA rate cuts," said Kyriakopolous.
Richard Grace, chief currency strategist at Commonwealth Bank of Australia, said while market volatility continues easing, funding constraints in Europe haven't subsided.
"It is probably worth paying attention to near-term movements in the three month euro basis swap for a guide to a potential spike in market volatility and a dip in the Australian dollar," Grace said.
-By Enda Curran and Geoffrey Rogow, Dow Jones Newswires; +61-2-8272-4687; geoffrey.rogow@dowjones.com
