WSJ:Australian Dollar Up Late, Back Above US$1.0200
Rates At 0500 GMT
Latest Change
AUD/USD 1.0241 +2.33%
AUD/JPY 79.57 +2.12%
6.50% May, 2013 3.3250% +0.0875
4.50% Mar, 2020 3.9078% +0.0721
10-Yr Spread To U.S. +186 bps -10 bps
SFE Dec 3-Year Futures 96.73 -0.12
SFE Dec 10-Year Futures 95.955 -0.08
SYDNEY (Dow Jones)-- The Australian dollar surged to a two-week high Thursday, supported by a coordinated central-bank effort to help financial markets, though traders pared some of its gains in late Asia action.
While the currency rallied, bond prices fell on both ends of the curve.
Spurring a third straight day of gains for the Australian dollar, which is now up roughly 5% this week against the U.S. unit, major central banks stepped in to shore up the global financial system by cutting the price of emergency funding by 50 basis points. In addition, China cut banks' reserve-ratio requirements by 50 basis points, its first such easing in three years.
Even as a report showing manufacturing activity in China declined in November weighed on the Australian dollar, the push-back off of earlier highs did little to stem a robust 24 hours for the currency.
At 0500 GMT, the Australian dollar was trading at US$1.0241, up from US$1.0007 late Wednesday. The Australian dollar hit an intraday high of US$1.0331. Against the yen, the currency changed hands at Y79.57, up from Y77.92 Wednesday.
Further weighing on the local currency was a weak reading of Australian building activity in October, a key report ahead of next week's Reserve Bank of Australia meeting.
"The tone in Asia has been about general profit-taking and the Aussie data didn't do anything to disperse the notion that the RBA will cut [its benchmark interest rate] in December," said David Scutt, a treasury dealer at Arab Bank Australia.
Scutt noted technical resistance at US$1.0330 also played a role in the currency's slide.
Economists voiced concern about what the weak building data might mean for the RBA, which lowered interest rates for the first time in more than two years last month.
"As a consequence [of the data and global growth worries], we have advanced our forecast for the next RBA rate cut to December's meeting, next week," said economists at ANZ Bank, which previously forecast a rate cut in February.
-By Geoffrey Rogow, Dow Jones Newswires; +61-2-8272-4686; geoffrey.rogow@dowjones.com
