Rates At 0520 GMT Latest Change AUD/USD 1.0023 -0.61% AUD/JPY 78.14 -0.53% 6.50% May, 2013 3.2268% +0.0469 4.50% Mar, 2020 3.7324% +0.0237 10-Yr Spread To U.S. +186 bps +5 pts SFE Dec 3-Year Futures 96.845 -0.055 SFE Dec 10-Year Futures 96.10 -0.045 SYDNEY (Dow Jones)--The Australian dollar fell steadily Wednesday as still heightened European jitters pushed the local currency close to parity with the U.S. dollar. After finding little solace from the Tuesday meeting of the U.S. Federal Reserve, traders noted the Australian dollar risked sliding further in the coming days on the European concerns, which were little settled by last Friday's European stability mechanism. On a technical basis, if the euro--recently at US$1.3038--dropped through support at US$1.3000, Sue Trinh, a strategist at RBC Capital Markets in Hong Kong, warned a correlation trade with the euro and Australian dollar meant that the Australian dollar would also fall broadly. Trinh also was concerned about upcoming events in European trading, adding that "the primary focus is on European developments and potential ratings actions. We are still waiting on S&P's view of the European deal and there is an Italian five-year bond auction to test the market's appetite." At 0520 GMT, the Australian dollar was trading at US$1.0023, down from US$1.0085 late Tuesday. Against the Japanese yen, the Australian dollar changed hands at Y78.14, down from Y78.56. Trinh tipped support for the Australian dollar at US$0.9980. Further weighing on the Australian dollar, consumer sentiment plunged in December as rising unemployment and heightened fears linked to Europe's debt crisis swamped news of cuts in interest rates over recent months. In addition, in an afternoon speech, Reserve Bank of Australia Deputy Governor Ric Battellino said a major crisis in Europe "can't be ruled out," and that the central bank remains alert to a sudden implosion of confidence in the euro-zone. "With significant risks to the Australian economy, some analysts now feel that further interest rate cuts will be necessary in 2012. This could be the reason why our local market is outperforming the region, while the Aussie dollar continues to struggle," said Stan Shamu, a market strategist with IG Markets. In the bond markets, Australian rates traders were focused on the December spot futures contract expiry and a roll over to March, due Thursday, with little else steering the market at the moment, said a Melbourne-based trader. -By Geoffrey Rogow, Dow Jones Newswires; +61-2-8272-4686; geoffrey.rogow@dowjones.com --James Glynn and Enda Curran contributed to this report. (Data provided by Reuters)

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