TA:Australian dollar little changed as France, Germany pledge aid for Greece
THE Australian dollar was little changed late today as attention turned to global equities markets and some traders predicted a brief pause in the uncertainty that has dominated trading over recent weeks.
"The world looked decidedly ugly on Wednesday. Then, like the wind, risk sentiment changed direction and a sense of order returned to markets," said Alex Stanley, strategist at Commonwealth Bank of Australia.
Asian sharemarkets were stronger today after France and Germany moved to assure the world they would support Greece's debt restructuring and maintain efforts to ensure it remains within the European community.
"If equities manage to hold gains again tonight then I suspect we have probably seen something of a hiatus of selling," said Robert Rennie, head of currency strategy at Westpac Bank.
But tensions are likely to simmer still while markets also await a potential downgrade of Italy's sovereign rating, traders added
Heading into next week, Mr Rennie said the market is looking to a meeting of the Federal Open Market Committee and meetings of the G-20 and the International Monetary Fund.
"This time next week, we are going to be in a different frame of mind," he said.
At 4.50pm AEST, the Australian dollar was at $US1.0215, up from $US1.0210 late yesterday. Against the Japanese yen, it was down to Y78.32 from Y78.49.
Australian data was mostly negative for the local dollar with a survey on inflationary expectations adding to arguments that the Reserve Bank of Australia should be in no hurry to raise interest rates.
The Melbourne Institute Survey of Consumer Inflationary Expectations increased slightly to 2.8 per cent in September from 2.7 per cent in August, still well within the central bank's comfort zone.
Inflation expectations are closely watched by policy makers as they can determine much about the kind of pay increases workers will pursue each year, which in turn can affect prices across the economy.
Michael Chua, a research fellow at the Melbourne Institute, said "expectations of high inflation appear to be off the boil as weaknesses in domestic labour markets, coupled with prolonged uncertainty in the global economy, begin to impact negatively on economic activity".
