WSJ:Australian Dollar Down Late, Hurt By Weaker Sentiment
Rates At 0502 GMT
Latest Change
AUD/USD 1.0372 -0.6%
AUD/JPY 85.7525 -0.8%
6.25% Apr, 2015 3.5235% -0.09
5.50% Mar, 2023 4.1879% -0.09
10-Yr Spread To U.S. +190 bps -12 bps
SFE Jun 3-Year Futures 96.51 +0.10
SFE Jun 10-Year Futures 95.94 +0.09
SYDNEY (Dow Jones)--Downbeat U.S. economic data and lower commodities and stocks weighed heavily on the Australian dollar Thursday, sending it close to key support levels.
Dealers said weaker-than-expected durable goods numbers in the U.S. weighed heavily on sentiment.
"With euro-zone peripheral stress no longer taking center stage, economic data has become increasingly more important," said strategists at BNP Paribas.
At 0502 GMT, the Australian dollar was trading at US$1.0372, down from US$1.0430 late Wednesday. The Aussie was at Y85.7525, down from Y86.4915.
Domestically dealers took note of a keynote speech by Australian Treasurer Wayne Swan who warned that weakening revenues mean the government will need to implement steep spending cuts to balance the budget.
"I can tell you today that further [revenue] write downs are expected to be made at the 2012-13 Budget. Collections, particularly relating to company profits, have been lower than expected," Swan said.
Dealers were also focused on next week's monthly policy meeting of the central bank with bets on a rate cut slowly increasing.
Economists are divided on the outlook. While some are tipping the Reserve Bank of Australia will ease by 25 basis points others say there's little new information since the last meeting to merit a cut.
"That we continue to think that the case for further modest easing is sound, we do not expect a move next week," said RBC Capital Markets economist Su-Lin Ong.
Limited local news, a lack of signalling from the RBA and a better global tone likely mean the bank will stay on hold, she said.
"While numerous challenges remain, we would argue that global activity and sentiment over the last month has been mixed to broadly stable," Ong said.
--By Enda Curran, Dow Jones Newswires; 61-2-8272-4687; enda.curran@dowjones.com
