Rates At 0530 GMT
Latest Change
AUD/USD 1.0381 +1.27%
AUD/JPY 81.05 +1.36%
6.5% May, 2013 3.8771% +0.0767
4.5% Mar, 2020 4.2413% +0.1006
10-Yr Spread To U.S. +215 bps -9 bps
SFE Dec 3-Year Futures 96.30 -0.09
SFE Dec 10-Year Futures 95.66 -0.09
SYDNEY (Dow Jones)--The Australian dollar rallied Friday as Greece's prime minister dropped plans for a referendum on a bailout plan for his country.
Further helping sentiment about risk-sensitive assets, including the Australian dollar, the European Central Bank defied expectations it would stand pat, cutting its main target rate 25 basis points to 1.25%.
Even though the developments were a boost for the Australian currency, the Australian dollar was unlikely to go much higher ahead of key data on employment in the U.S. overnight and as the group of 20 leading industrialized nations meet in France, said David Greene, senior corporate foreign exchange dealer at Western Union in Sydney.
After the Reserve Bank of Australia cut its key benchmark rate on Tuesday, Greene said anything above US$1.0500 is going to be difficult.
"From a value standpoint, anything above US$1.0400 and up to US$1.0700 is probably overvalued given the RBA and really anything north of US$1.0500 is a stretch," says Greene, tipping support at US$1.0200 in the short term.
At 0530 GMT, the Australian dollar was trading at US$1.0381, up from US$1.0249 late Thursday. Against the yen, the currency changed hands at Y81.05, up from Y79.96.
Looking beyond the RBA's Tuesday decision, National Australia Bank said it expects the central bank will cut once again in February. But even with that forecast that more fiscal stimulus is needed in Australia, NAB said foreign buyers will still covet the country's bonds. Notably, as of June, foreign ownership of Australian Government securities stood at 75%.
"We expect even more robust demand from foreign central banks looking for higher quality (Australian dollar) exposures and domestic banks who need to buy substantial amounts of (bonds) to meet Basel 3 liquidity hurdles," said Peter Jolly, head of research at NAB.
--By Geoffrey Rogow, Dow Jones Newswires; +61-2-8272-4686; geoffrey.rogow@dowjones.com
