Rates At 0530 GMT Latest Change AUD/USD 1.0295 +1.38% AUD/JPY 79.36 +0.78% 6.5% May, 2013 3.6506% +0.0616 4.5% Mar, 2020 4.1040% +0.0397 10-Yr Spread To U.S. +204 bps unch SFE Dec 3-Year Futures 96.46 -0.09 SFE Dec 10-Year Futures 95.765 -0.075 SYDNEY (Dow Jones)--The Australian dollar surged Monday along with other risk-sensitive assets across the globe, including equities, helped by signs of improving stability in Europe. Driving the local currency late Friday in U.S. action and in early Asian trading was rumors of and then the eventual appointment of economist and former European Union competition commissioner Mario Monti as Italy's premier-designate on Sunday. Monti vowed to form an Italian government "as fast as possible while doing a good job," moving swiftly to restore confidence in the fractured political establishment. Further helping the Australian dollar, Japan's third-quarter gross domestic product rose for the first time since the March 11 earthquake and tsunami, an important improvement for one of Australia's largest trading partners. At 0530 GMT, the Australian dollar was trading at US$1.0295, up from US$1.0155 late Friday. Against the yen, the currency changed hands at Y79.36, up from Y78.744. Still, the Australian dollar did drift lower in late Sydney action, with one Sydney-based trader noting that medium-term buyers are reluctant to purchase the pair as the European situation still remains "shaky." The trader tipped support for the Australian dollar at US$1.0200 to US$1.0220 and resistance at US$1.0350. TD Securities recommended buying the Australian dollar against the euro on Monday, forecasting a benefit from expectations China may seek to stimulate growth once it's clear inflation has cooled. TD Strategist Roland Randall said the trade would need to be exited if the European Central Bank signaled a major intervention policy. While the currency gained, bonds fell on both ends of the curve. Paul Bloxham, an economist at HSBC in Sydney, noted that the strength of the Australian dollar in the past 18 months has been particularly helpful in fighting inflation. But as the currency likely levels out, inflation pressures could return. "Without further appreciation, the effect of the (Australian dollar) on holding back inflation should wane," said Bloxham, hinting that such a rise could tip the Reserve Bank of Australia to reverse an interest rate cut earlier this month, a development that would weigh on bond prices. -By Geoffrey Rogow, Dow Jones Newswires; +61-2-8272-4686; geoffrey.rogow@dowjones.com

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