Rates At 0530 GMT
Latest Change
AUD/USD 1.0774 +0.8%
AUD/JPY 86.587 -0.2
6.25% Apr, 2015 3.6202% -0.06
5.50% Mar, 2023 4.1786% -0.05
10-Yr Spread To U.S. +215 bps -8 bps
SFE Mar 3-Year Futures 96.39 +0.06
SFE Mar 10-Year Futures 95.965 +0.055
SYDNEY (Dow Jones)--The Australian dollar was rangebound Tuesday, but tacked on some gains as markets awaited a short-dated liquidity tender by the European Central Bank.
"Price action seems to be distorted by month-end flows, with otherwise tight correlations breaking down somewhat," said RBC Capital Markets FX Strategist Sue Trinh.
Markets were waiting to see the take-up of the ECB's tender of cheap seven-day loans for banks, ahead of an expected bumper offer of three-year loans Wednesday. The take-up and demand for those offers should be key in steering sentiment over the coming days.
"Our European Strategy team expect that if the seven-day take-up is small and the one-day fine-tuning operation is respectively large, it may be an indication of a larger take-up in the three-year tender tomorrow," said Trinh.
At 0530 GMT, the Australian dollar was trading at US$1.0774 versus US$1.0690 late Monday. Against the Japanese yen, the Australian currency changed hands at Y86.587, versus Y86.8005.
National Australia Bank FX strategist Emma Lawson said the focus for currency markets is shifting from Europe to the bigger global macro story.
The large volume of liquidity in the system should bode well for forward indicators, she said.
"This should allow for better [European Union] confidence numbers tonight, but should also provide a fillip for equities and growth assets. We still prefer to see this in the Canadian dollar or Asian currencies rather than the Australian or New Zealand dollar at current levels," said Lawson.
Mitul Kotecha, head of global foreign-exchange strategy at Credit Agricole Corporate and Investment Bank, said there are indications commodity currencies have peaked.
"Both the Australian dollar and New Zealand dollar have failed to extend gains over recent weeks. Perhaps valuation concerns are finally begging to catch up with these currencies, while speculative positioning according to IMM data remains at high levels. The Australian dollar and New Zealand dollar even look stretched relative to interest-rate differentials," he said.
--By Enda Curran, Dow Jones Newswires; 61-2-8272-4687; enda.curran@dowjones.com
