WSJ:Australian Dollar Up Late But Europe Uncertainty High
Rates At 0650 GMT
Latest Change
AUD/USD 1.0351 +0.09%
AUD/JPY 79.73 Unchanged
6.50% May, 2013 3.5292% +0.0221
4.50% Mar, 2020 4.0619% -0.0039
10-Yr Spread To U.S. +218bps -5 bps
SFE Sep 3-Year Futures 96.435 -0.025
SFE Sep 10-Year Futures 95.87 -0.015
SYDNEY (Dow Jones)--The Australian dollar was slightly higher late Tuesday but lacking any real direction as traders braced for more uncertainty in European trading, with many fearing Greece is lurching closer to default on its debt repayments.
The lack of direction also reflected a mixed session for Asian share markets following modest gains by Wall Street on Monday. A report that China may support Italy by purchasing its debt was also lending support to currencies such as the euro, traders said.
Arab Bank senior trader David Scutt said confirmation that the Chinese are buying Italian debt will further boost the euro, but all could be undone if there are more negative reports from Greece.
Data released Tuesday were largely overlooked given the heightened uncertainty in Europe.
"The euro is getting some tentative support from the China news, but there is some hesitation elsewhere as (the market waits) for confirmation that China will indeed buy Italy's debt," said Emma Lawson, currency strategist at NAB.
Australian business confidence plunged 10 points in August from July, according to National Australia Bank's monthly business survey, raising doubts about whether businesses will keep hiring in the second half of the year.
Unemployment has risen in Australia over recent months, emphasizing weakness in the non-mining sector of the economy. NAB chief economist Alan Oster said manufacturing has been hit hard by the high Australian dollar and is now experiencing recessionary conditions.
Kit Juckes, head of foreign exchange at Societe Generale, said he remains wary of the Australian dollar, "which looks like the most vulnerable of the G-10 currencies on a one-month view."
At 0640 GMT, the Australian dollar was at US$1.0351, up from US$1.0341 late Monday. Against the Japanese yen, it was unchanged at Y79.730.
--By James Glynn, Dow Jones Newswires; 61-2-8272-4685; james.glynn@dowjones.com
