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Australian Dollar News |
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Australia dollar cautious ahead of rate decisions SYDNEY, Feb 1 (Reuters) - The Australian dollar, still licking its wounds after a savage sell off last week, was trapped under 64 cents on Tuesday as a cautious market waited for the outcome of local and U.S. interest rate policy meetings. Rates in both countries are expected to be lifted by 25 basis points, possibly more, but until the decisions are made the Aussie is expected to be contained in about a half cent range with the risks seen more weighted to the downside. At 4:00 p.m. (0500 GMT) the Australian dollar <AUD=> was at its lows for the day at $0.6351/56, from an early $0.6369/74 and Monday's late $0.6379.84. The Australian dollar lost three cents in a matter of hours when it was heavily sold by hedge funds in New York on Friday, falling from above 65 cents to a nine month low of $0.6225. Since then a nervous market has been unwilling to take the Aussie back above 64 cents for fear of triggering further selling, and with sentiment dominating fundamentals the Aussie has been held in a half cent range under $0.6390 this week. The Reserve Bank of Australia board met on Tuesday, and is expected to announce a rate hike of 25 basis points at its Wednesday morning market operations -- ahead of what markets expect will be a similar announcement from the U.S. FOMC later on Wednesday (Thursday morning Australian time). The risk for the Aussie is seen as weighted towards a larger move by the U.S. Fed, widening the current 50 point differential between Australian and U.S. rates. "Our base case is for a 25 basis points move by both the RBA and the Fed, leaving the spread at 50 basis points in favour of the USD," Macquarie Bank currency strategist Jo Masters said. "However, our assessment of the balance of risks suggests that the spread could widen to 75 basis points, suggesting that the AUD will struggle ahead of the announcements by the RBA and Fed," she said. The best outcome for the Aussie would be a 50 basis point rate rise by the RBA, and a 25 point rise in the U.S. -- narrowing the interest differential to 25 basis points. But speculation on such an outcome was dampened on Friday when benign local inflation data was followed by strong U.S. GDP and wage cost reports. The Aussie will also have to contend with December trade deficit on Wednesday -- due two hours after the expected RBA rate rise -- but this is expected to come in around the A$1.1 billion seen in November, confirming signs the current account deficit spiked in the September quarter. On the crosses the Aussie was also fairly steady through the day after Friday night's losses, ending at 55.9 in trade weighted terms from Monday's late 56.0, the lowest since late December. The Aussie ended at 68.15/25 yen and NZ$1.2820/48 from Monday's late 68.14/24 yen and NZ$1.2887/2915. 01:03 02-01-00 Copyright 2000 Reuters Limited. |
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Australian commodities see payoff in (Australian) dollar fall By Michael Byrnes SYDNEY, Jan 31 (Reuters) - Australian commodities could expect a reasonable payoff from the lower Australian dollar, economists and analysts told Reuters on Monday. "It's very good news for the producers of commodities," said Rob Henderson, chief economist at Dresdner Kleinwort Benson. With almost all Australian commodity exports priced in U.S. dollars, a weaker Australian dollar produces extra profit margins for Australian producers after conversion to the local currency. The five percent fall in the Australian dollar on Friday to less than US$0.63 could hardly have come at a more fortuitous time, with The Broken Hill Pty Co Ltd <BHP.AX> seen on the verge of accepting a five percent cut in U.S. dollar-denominated prices for coking coal exports to Japan in 2000/01. Australia's coal exports, worth a total of around A$8 billion a year, are the country's largest single commodity export. A price cut accepted by BHP is seen flowing on to other coking coal producers, then pressing down on prices of other grades of coal. An expected wider gap between U.S. and Australian interest rates that was pushing down on the Australian dollar meant that the local currency was expected to underperform any upward movement in underlying commodity prices, Henderson said. "Returns to Australian dollar producers should be affected positively because the currency is effectively undervalued against commodities," he said. WINDFALL GAINS SPREAD THROUGH MOST MARKETS Other economists pointed out that while generally recovering commodities markets had not buoyed the Australian dollar, commodities producers would gratefully accept currency gains. "In the short-term in Australian dollar terms commodity prices now look that much higher," said Michael Blythe, chief research economist at the Commonwealth Bank of Australia. "Local commodity producers should be looking a little bit better this morning than on Friday morning," he said. Currency gyrations also had the potential to negatively affect some commodities, economists said. A weaker gold price on Monday morning was a prime example. Some Australian gold producers had taken advantage of a stronger Australian dollar price of gold, through the local dollar's fall, to sell the metal, gold traders told Reuters. Fundamentally the Asian recovery would also underpin commodity markets, Henderson added. "I'm not too worried about commodities," he said. 02:12 01-31-00 Copyright 2000 Reuters Limited. |
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(Australian) Dollar recovering after last week's assault The Australian dollar is this morning picking itself up off the floor, as global financial markets are again wracked by volatility. Strong US economic growth figures have stoked interest rate fears. Numbers out of Washington on Friday night showed an annualised economic growth rate of 5.8 per cent. Westpac's chief foreign exchange dealer, Peter McGrath, says that has heightened speculation the US Federal Reserve will lift interest rates by half a percentage point this week, putting a number of currencies, including the Australian dollar, under pressure. The Friday night low for the Australian dollar was around 62.2 US cents, a plunge of three cents to its lowest level since last April. Despite some rumours of intervention on Saturday morning, dealers this morning say they have seen no sign of the Reserve Bank in the market. Exporters having been buying the currency at its lower levels, and this morning, it has recovered about half the ground lost. Just before 9:00am AEDT, the dollar was trading at around 63.73 US cents, up 1.5 cents from its weekend low, but still well down on Friday's local close of 65.13. Meanwhile, the Australian sharemarket faces heavy selling pressure this morning, with the renewed US interest rate fears driving down stock prices on Wall Street. The New York's Dow Jones index dropped 289-points, or 2.6 per cent. In Australia, the Share Price Index futures contract closed down 47-points on Saturday morning. Monday 31 January, 2000 8:55am AEDT |
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A$ fall due to U.S. events - Australia's Costello MELBOURNE, Jan 31 (Reuters) - Australian Treasurer Peter Costello said on Monday that the sharp fall in the Australian dollar was mostly due to events in U.S. financial markets. "What's happened in relation to the dollar is really international events," Australian Associated Press reported Costello as saying. "You had a very strong U.S. growth figure Friday our time. It's widely believed in financial markets that the U.S. Fed will be raising interest rates. Australian interest rates are lower than U.S. interest rates and people thought that if a large gap opened up they would take a position accordingly," he said. Costello said there were all sorts of "ifs" in that equation. "Whether they are right or whether they're wrong, time will tell." The Australian dollar fell to 62.25 U.S. cents in New York trade on Friday night, its lowest level since last April. Traders said hedge funds had dumped the currency. The currency was quoted at US$0.6385/90 at 0320 GMT (14:20 p.m.) on Monday. 22:28 01-30-00 Copyright 2000 Reuters Limited. |
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TECHNICALS-Dazed Aussie wary after 3 cent rout AU$S/Term range *Support *Restance *RSI-14 *MA-10 *MA-20 *0.6320/6420 *0.6340 *0.6380 *19.62 *0.6570 *0.6578 -------------VIEWS FROM THE MARKET - Jan 31 -------------- *Offshore range roughly $0.6225/6510 *Australian dollar loses three cents in Friday night plunge to lowest level since last April after strong U.S. data sees USD strengthen across the board, following benign local CPI data. *Aussie recovers to above $0.6350 in early local trade, but market circumspect and 64 cents expected to prove toppish. *RBA and U.S. Fed both seen lifting rates this week. SYDNEY, Jan 31 (Reuters) - A dazed Australian dollar was treading warily on Monday morning as traders assessed its prospects in the aftermath of Friday night's three-cent plunge against the U.S. dollar to its lowest level since last April. The Aussie was already weakening after benign CPI data on Friday undermined forecasts the Reserve Bank would lift interest rates by 50 basis points when the U.S. dollar, boosted by strong GDP and employment cost data, rallied across the board with commodity currencies hurt in particular. The Aussie fell as far as $0.6225 as hedge funds took control, before it rebounded to back above $0.6350. At 8:00 a.m. (2100 GMT) the Australian dollar <AUD=> was at $0.6368/73 from Friday's late $0.6505/10, and looking a little unsure of itself. "The market is circumspect -- you don't get a three-cent washout and not feel a little bit off balance," Macquarie Bank corporate dealer Geoff Bowmer said. Bowmer said the Australian dollar was caught out as "momentum players took over and were virtually selling into a vacuum." "There was very little buying interest, because the market I think had just not conceived that it could go that low," he said. The Aussie could push up towards 64 cents on Monday, but gains are expected to be sold ahead of the RBA and U.S. FOMC meetings this week. The case for a 50 basis point rate hike by the RBA was weakened by Friday's inflation data, with the RBA now only expected to lift rates by 25 points -- the same as the Fed and therefore offering no narrowing of the 50 point differential. With a local rise of 25 basis points having been long factored into the market, the news is not expected to give the Aussie any boost as it seeks to restart the rally it has been promising for some time. The first opportunity for the RBA to lift rates after its Tuesday meeting is on Wednesday morning, while the Fed is expected to move after its meeting concludes on Wednesday (Thursday morning Australian time). Westpac currency strategist Greg McKenna said on a longer term fundamental basis the Aussie seemed a good buy around 63 cents, but the trading outlook was more clouded given Friday's fall. "Even though the AUD traded down to a low of $0.6225 its ability to hold above $0.6285 is reassuring from a technician's viewpoint," he said. "Holding this level is crucial for the outlook. While the Aussie is above here buying is still favoured," he said. 17:08 01-30-00 Copyright 2000 Reuters Limited. |
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Australian Dollar Plunges as Outlook for Rate Boost Eases Sydney, Jan. 31 (Bloomberg) -- The Australian dollar posted its biggest one-day decline in over a year after a smaller-than- expected rise in consumer prices damped expectations the central bank will raise interest rates aggressively. At the same time, reports showing accelerating economic growth in the U.S. raised the possibility U.S. rates may rise more than Australia's after both nations' central banks meet this week. ``That's got the market talking about half a percent rise in the States rather than a quarter,'' said Nick Volanakis, senior foreign exchange dealer at Colonial State Bank. ``There's a short- term perception that a higher rate in a country like the States is more attractive than a lower rate in Australia.'' The Australian dollar, or Aussie, fell 1.7 percent to 63.82 U.S. cents, from 64.93 Friday, its biggest one-day decline since Dec. 3, 1998 and the fourth day of declines. The Australian dollar was the world's third-worst performer last week, falling 2.5 percent against the U.S. dollar. The New Zealand dollar fell to 49.45 U.S. cents from 49.65 U.S. cents, extending Friday's 2.4 percent decline, prompted by a report showing the nation's trade deficit widened more than expected in December. The Australian currency plummeted Friday as the government said its consumer price index rose 0.6 percent in the last three months of 1999, less than the 0.8 percent average increase expected by analysts in a Bloomberg News survey. In addition, the Australian dollar and the yen were among the currencies sold by a large hedge fund, traders said. Higher Rates Some analysts now say that a 25 basis-point rate increase next week will be enough to keep inflation in check in Australia. Some investors were betting on a 50 basis point increase. Higher rates can boost the appeal of a country's currency by increasing returns on bank deposits and bonds. Seven out of 14 economists surveyed by Bloomberg News Friday expect the central bank to raise the benchmark cash rate for overnight loans by a quarter percentage point, while five are predicting a half percentage point increase. That increase is likely to be matched by an increase by the U.S. Federal Reserve. The Fed is expected to raise borrowing rates Tuesday by at least 25 basis points and again in March. Investors tend to buy currencies in countries where interest rates are higher because of the prospect of better returns. Australia's central bank last lifted its benchmark rate by 25 basis points to 5 percent on Nov. 2. The Fed's key interest rate -- its target for overnight bank lending -- is currently at 5.5 percent, and New Zealand's cash rate is at 5.25 percent. New Zealand The New Zealand dollar fell to 48.90 U.S. cents from 49.20 cents in late New York trading Friday. Earlier Friday it reached 48.43 U.S. cents, its lowest level in a year. The currency is the third-worst performer against the U.S. dollar this year, down 5 percent. The currency plummeted Friday as New Zealand's monthly trade deficit surged above NZ$1 billion (US$502 million) for the first time. The widening trade gap suggests the current account deficit -- the broadest measure of the flow of goods, services and investment -- may widen. That could weaken the nation's currency as it leaves a burgeoning pool of New Zealand dollars in the hands of foreign firms, who may then convert them into their home currencies. ``The fall has been triggered, perversely, by the New Zealand current account which dragged down the Aussie as well,'' said Stu Nattrass, head of foreign exchange sales at WestpacTrust. Trading is likely to be less than usual today because of a holiday in Auckland, the nation's most populous city. Jan/30/2000 17:04 (C) Copyright 2000 Bloomberg L.P. |
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Australian central bank seen unfazed by A$ rout By Ruth Pitchford SYDNEY, Jan 30 (Reuters) - It takes more to faze Australia's central bank than a five percent lurch in the Aussie dollar's value, but official calm may not soothe market nerves this week. Analysts expect the Reserve Bank of Australia to raise official rates by a modest quarter-point to 5.25 percent on Wednesday -- which will do little to salve the wounds inflicted on Aussie dollar bulls during currency turmoil in New York on Friday. Evidence of dynamic U.S. economic growth sent the U.S. dollar into overdrive. At one stage on Friday the Aussie sank to US$0.6235, more than three U.S. cents below the area it was exploring just hours earlier in Sydney. The Australian central bank built a reputation during the Asian economic crisis for keeping its cool when its currency comes under fire, holding interest rates steady through an Australian dollar plunge to a record low of 55.30 U.S. cents in 1998. "The RBA doesn't have a reputation for panicking," said Clifford Bennett at BNP, who sees little chance of the bank raising official rates closer to those in the United States. The U.S. Federal Reserve is also expected to raise rates by a quarter-point on Wednesday, keeping U.S. official rates half a point above Australia's. Wednesday will also deliver Australian trade data for December. That is expected to show another A$1 billion-plus deficit, reminding investors the current account deficit is running close to six percent of gross domestic product. MARKETS ON EDGE "There's plenty there to keep the markets on edge," said Michael Blythe, chief research economist at Commonwealth Bank of Australia. "You'd have to say there'd be downside risk (for the Aussie) in the next few days." Craig James, group economist at Colonial State Bank, discounts the current account deficit as an old story, noting evidence that it has peaked and is now on a declining trend. But he agrees Wednesday's trade data has the potential to unsettle a market primed to see bad rather than good news. The currency's woes could also drag on the local bond market, where Blythe at Commonwealth Bank suspects investors will exact a risk premium for Australian issues after Friday's volatility. Australia's stock market will be more focused on falls in the Dow Jones and Nasdaq. But James at Colonial says resource stocks could outperform, providing companies have not hedged away the chance of converting U.S. dollar earnings into a weaker Australian dollar. RARE AUSSIE BEAR Bennett, senior treasury strategist at BNP, has long stood out as an Aussie dollar bear in Sydney, where most have spent the past year anticipating a rally to 70 U.S. cents. The Aussie clambered back above 63 U.S. cents as U.S. trade ended and Bennett says it will probably try to bounce in Sydney. But he expects US$0.6430 to cap it for now and puts the range in coming months at US$0.6150 to US$0.6550. Over the next two years, his range for the Aussie is US$0.5700 to U$0.6880. During Friday night's plunge, the Aussie was pummelled to 10-month lows as the U.S. dollar surged across the board, posting record peaks against the beleaguered euro and rising two yen against the Japanese currency. Blythe at Commonwealth Bank says 70 U.S. cents is still possible this year with the aid of global growth, rising prices for commodity exports, a narrowing current account deficit and a big economic boost from the Sydney 2000 Olympic Games. But he says the Australian dollar had overshot commodity prices and that 63 U.S. cents is fair value for now. Bennett says the local market has been ignoring both the irresistible appeal to investors of a vibrant U.S. economy and the unlovely bulk of Australia's current account deficit. "There are other investment opportunities (outside Australia) for the fund management brigade," he said. "The U.S. economy remains the masterpiece of the globe. "The currency is about where we're pricing ourselves in the global marketplace. We've got global growth, good commodity prices and we still can't get a reasonably good trade outcome. I think it's a positive," he said of the Aussie dollar's fall. 21:33 01-29-00 Copyright 2000 Reuters Limited. |
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(Australian) Dollar collapses in overnight trade Fears of higher interest rates in the United States have seen the Australian dollar collapse in overnight trade. The dollar closed at 65.13 US cents in local trade yesterday. But overnight traders decided it was no longer worth holding, and it collapsed nearly three cents to be 62.3. It is biggest one-day fall in two years. Analysts put down the sudden drop to expectations of a large interest rate rise in the United States when the Federal Reserve meets next week - some say the rise could be as high as 50 basis points. Just before 9:00am AEDT the Aussie had reconvered a little to be 63.25 US cents. Meanwhile New York's main market indicator, the Dow Jones Index, has dropped more than 2.6 per cent. It has closed for the day down 289 points to be at 10,789. The local All Ordinaries closed up 8 points yesterday at 3,092. Saturday 29 January, 2000 10:47am AEDT |
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Strong US growth dents Aussie dollar The Australian dollar has collapsed to its lowest value in 12 months. At the close of local trade yesterday, the dollar was valued at just over 65 US cents but on overnight trade it fell nearly three cents to 62.3 cents. It has since recovered a little to be at 63.08 cents. Analysts put down the sudden drop to expectations of a large interest rate rise in the United States, prompted by stronger than expected economic growth. Saturday 29 January, 2000 9:09am AEDT |
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Australian, NZ dollar slide to multi-month troughs NEW YORK, Jan 28 (Reuters) - The Australian and New Zealand currencies tumbled to multi-month lows against the U.S. dollar on Friday, hit by broad dollar strength and technical selling in illiquid trading conditions. Dealers also said the Australian dollar had come under pressure amid market talk that a large hedge fund had been forced to liquidate its Australian dollar positions. "Nobody really knew what was pushing it. It was very illiquid and the funds were very active," said one foreign exchange trader. "Stop after stop got set off. People were just dumping positions." Near midday, the Australian dollar extended its overnight losses and slumped as low as $0.6235 against the U.S. dollar, a level not seen since last April. It then quickly pared its losses to orbit $0.6300, lifted amid rumors that the Reserve Bank of Australia (RBA) had intervened in the currency markets to stem the Australian currency's sharp slide. A representative at the RBA in New York was unable to confirm or deny this. But the Australian currency hung some 3.5 percent lower against the U.S. dollar in late U.S. trading, and dealers were skeptical that its sharp bounce reflected central bank action. "The price action was such that would suggest that, but it could be hedge fund activity again," said Pete Stahl, trader at Australian and New Zealand Banking Group in New York. The New Zealand dollar, nicknamed the kiwi, came under similar pressure, tumbling to $0.4849, its lowest point in more than 1-1/2 years. The kiwi also pared its losses to stand near $0.49 at 3:00 p.m. (2000 GMT). Traders were somewhat taken aback by the Aussie and kiwi's sharp declines, and they struggled to find something solid on which to pin the moves. "You wouldn't have expected the to move as much as they did. There were obviously some very large sellers, and maybe it's also just thin here in the U.S." said Mark Thome, vice president at Fortis. The U.S. dollar's strength against other major currencies also helped push the Aussie and kiwi lower, dealers said. The greenback rallied to lifetime highs against Europe's single currency earlier in the U.S. session, racing as high as 97.36 cents per euro, and shot to 3-1/2 month highs against the Japanese currency just above 107 yen. It also bolted to a fresh 10-year high against the Swiss franc of 1.6542 francs. "Anything that was not dollar was getting crushed," a trader said. 18:02 01-28-00 Copyright 2000 Reuters Limited. |
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Aussie dollar at 2-week lows vs dollar in Europe LONDON, Jan 24 (Reuters) - The Australian dollar hovered at two-week lows against the U.S. dollar on Monday in Europe, undermined by profit-taking following the Aussie currency's failure to break the topside of its range over the past week. "Nothing fundamental has caused it. It wasn't triggered by one particular event," said James Shugg, economist at Westpac in London. "It started late Friday by one U.S. name and then a U.S. and a European name excuted large orders in the Australian time, triggering stop/loss orders." The Australian dollar was at US$0.6542/47 at 1325 GMT, down from US$0.6561/66 in Sydney. Traders said the Australian dollar could dip to US$0.65, but remained supported by strong fundamentals. The data released earlier confirmed a picture of a robust economy, supporting the outlook for an interest rate hike by the Reserve Bank of Australia next week. Australian producer input prices rose by 4.9 percent in the fourth quarter, mainly due to increase in oil prices. The rise was above a 1.4 percent gain in producer output prices released on Friday. Traders were now awaiting key consumer prices data for the fourth quarter due out on Friday. The CPI was seen helping to clarify whether the Reserve Bank of Australia would hike interest rates by 25 or 50 basis points. "The CPI data at the end of the week should be supportive. Strong CPI would firm up expectations of a 50 basis points rise next week," said Shugg from Westpac. The New Zealand dollar was pinned close to a one-month low of US$0.5085 <NZD=>, tracking losses in the Australian dollar. However, traders said the New Zealand dollar may not benefit from a recovery in the Australian dollar as the market had already seen Kiwi inflation data and more or less priced in higher interest rates in New Zealand. "If the Australian dollar rallies because of higher interest rate expectations then that may not benefit the kiwi dollar as much as the Australian dollar," said Shugg. The Canadian dollar was mired in C$1.4430/84 range against the dollar ahead of Canadian November wholesale data due out at 1330 GMT. Attention also focused on the U.S. Federal Reserve Open Market Committee meeting on February 1-2, when a quarter percentage point rate rise is widely expected. 09:21 01-24-00 Copyright 2000 Reuters Limited. |
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TECHNICALS-Aussie dips to 2-wk low as losses mount AU$S/Term range *Support *Restance *RSI-14 *MA-10 *MA-20 *0.6480/6630 *0.6520 *0.6570 *36.57 *0.6626 *0.6584 -------------VIEWS FROM THE MARKET - Jan 25 -------------- *Offshore range roughly $0.6529/6592. *The Australian dollar extends its losses in offshore trade to touch two-week lows as players grow frustrated with its failure to break the topside of recent range. *Support lined up at $0.6540, $0.6520 and $0.6480. *Medium-term prospects still solid, RBA meets next week. SYDNEY, Jan 25 (Reuters) - The Australian dollar extended its losses in offshore trade to touch a two-week low as market participants grew frustrated with its failure to break the topside of its recent range. Analysts said further small losses were possible in the near term but the consensus remains that the dollar's medium-term prospects remain solid as official interest rates rise. By 8:15 a.m. (2115 GMT), the Australian dollar <AUD=> was resting on support at $0.6540/45, having dipped to a low of $0.6529 overnight and compared with $0.6561/66. The dollar has lost more than a cent in the past 24 hours. Technical analysts noted the $0.6540 level was the 38 percent retracement level of the recent rally from $0.6302 to its six-month peak at $0.6688. They said a break of $0.6540 would open the way to the 50 percent level of $0.6495. A long speculative market has been cited for the dollar's rapid retreat from last week's highs. "The AUD has come under sustained pressure with the majority of the interest attributable to stop-loss selling, flushing out old long positions established in the wake of the recent strong employment report," said Citibank Salomon Smith Barney analyst Annette Beacher in a morning note. "International interest which appeared AUD supportive over the last two weeks now feels mildly bearish," she said, adding that further moves lower could not be ruled out with local corporate appetite remaining light. Commodities prices were softer overnight, with gold languishing a day before Britain's bullion auction. Also dampening trade this week is the closure of financial markets on Wednesday for Australia Day. There is no major data scheduled until Friday's CPI report, which is seen helping shape expectations for the size of the Reserve Bank's rate rise after its first meeting of the year next week. 18:46 01-24-00 Copyright 2000 Reuters Limited. |
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Australian Dollar Falls on G-7 Comments; NZ Dollar Declines Sydney, Jan. 24 (Bloomberg) -- The Australian dollar fell as investors bought U.S. dollars after officials of the Group of Seven leading industrial nations reiterated their concern about the yen's strength. Still, traders and investors expect the currency to strengthen over this week stronger commodity prices and expectations the Reserve Bank will raise interest rates next week. The Australian dollar is ``now looking very cheap,'' said Shane Clinton, foreign exchange manager at AMP Investments Australia Ltd. ``People will see where the interest rates differentials are and where commodity prices are and buy.'' The Australian dollar, known as the Aussie, fell 1.1 percent to 65.68 U.S. cents, its biggest one-day decline in 11 weeks. The New Zealand dollar fell 1.1 percent to 50.84 U.S. cents the lowest level since Dec. 21 when it reached 50.38. The currency has fallen about almost 2 percent since the central bank's interest rate increase Wednesday reduced the possibility of further increases that could make some financial assets in the currency more appealing. G-7 officials from the U.S., Germany, France, the U.K., Italy and Canada said they share Japan's concern about the effect a strong yen would have on the Japanese economy. Clinton said U.S. hedge funds, loosely regulated portfolios for wealthy individuals and institutional investors, were among those selling that Australian dollar. Gains Ahead? That said, the Aussie could rise this week because consumer price figures, due Friday, are expected to signal rising inflation, strengthening the case for a rate increase. Higher rates in a country can boost the appeal of its currency by providing greater returns on bank deposits and bonds. Consumer prices are expected to show a 2 percent annual increase in the last three months of 1999, up from 1.7 percent in the previous quarter. The central bank targets a band of between 2 percent and 3 percent inflation when setting monetary policy. The Reserve Bank of Australia ``will raise rates by a quarter (percentage) point next week,'' said Noel Murphy, who helps manage A$5 billion (US$3.3 billion) at ANZ Funds Management in Melbourne. Australia's central bank last lifted its benchmark cash rate by quarter percentage point to 5 percent Nov. 2. The Federal Reserve's key interest rate -- its target for overnight bank lending -- is currently at 5.5 percent and New Zealand's cash rate is at 5.25 percent. Also, Australia's currency should benefit from higher commodity prices. Exporters earn more foreign currency from sales of their goods overseas, and then repatriate that revenue back into Australian dollars. The Bridge-Commodity Research Bureau Index, which tracks 17 raw materials traded in the U.S., rose above 210 Wednesday for the first time since July 1998. The index has gained about 4.7 percent in the past two weeks. New Zealand The New Zealand dollar, or Kiwi, tumbled 1.1 percent, its biggest one-day decline in two weeks. The Kiwi's earlier decline was triggered by a report Wednesday showing inflation rose 0.2 percent in the fourth quarter, lower than expectations among analysts for a 0.7 percent increase. The currency was the world's second-worst performer last week, returning 2.1 percent in losses to U.S. dollar investors. The inflation report reduced the odds that the central bank will boost interest rates again soon. New Zealand's Reserve Bank on Wednesday raised the benchmark interest rate a quarter point to keep inflation in check. ``From an offshore perspective it looks a little crazy,'' said Dean Sheridan, head of foreign exchange sales at Citibank in Auckland. Sheridan said the New Zealand dollar won't rise significantly until economic reports validate the central bank's view the economy is growing strongly. Central banker Donald Brash is scheduled this week to discuss the interest rate increase with Finance Minister Michael Cullen, among those questioning the need for a rate rise. Jan/24/2000 0:23 For more stories from Bloomberg News, click here. (C) Copyright 2000 Bloomberg L.P. |
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Australian dlr buckles below 66c as rally fades By Victoria Thieberger SYDNEY, Jan 24 (Reuters) - The Australian dollar succumbed to a severe bout of profit-taking on Monday that took nearly a full cent off the currency's recent rally as speculative long positions were shaken out. Though fundamentals including rising commodities prices and an anticipated rate hike next week by the Reserve Bank are expected to underpin the Aussie in the medium term, traders said the unit was ripe for consolidation after its rapid New Year gains. The dollar was nervously poised above moderate support at $0.6560 but traders said a dip to the low 65-cent area was on the cards, with little incentive to bounce from current levels. By 4:05 p.m. (0505 GMT), the Australian dollar <AUD=> had retreated to $0.6561/66, compared with its $0.6600/05 in early trade and $0.6650/55 here late on Friday. After holding above $0.6620 support in offshore trade on Friday, the break came swiftly on the local open. "There was a willingness to take a bit of profit on this move up through December and early January, which just left a few of the speculative longs built up a little vulnerable," said Deutsche Bank currency strategist Tim Moloney. "The fact is the Aussie had come a long way in a short space of time, not so much against the USD but particularly on some of the crosses," Moloney said, citing a 10 percent gain against the yen in a month and recent bounce against the Canadian dollar. But on Monday, the Canadian dollar became the dollar-bloc currency of choice on speculation the central bank might pre-empt the Federal Reserve's rate rise. The yen was also steady after receiving a few words of support from the weekend G7 finance ministers meeting in Tokyo. The incentive for the Aussie's rally in the first part of January had been a string of solid economic data that fuelled market speculation of a 50 basis point rate hike by the Reserve Bank after its first meeting for the year next Tuesday. But the absence of data over the past week prompted a rethink of those aggressive expectations, with the cautious RBA seen as more likely to stick to its recent form of 25-point moves. There was also some caution for the Aussie ahead of the Bank of England's gold auction on Tuesday. Partial price data released on Monday pointed to a moderate CPI report on Friday, with expectations for a 0.8 percent increase in the December quarter and 2.0 percent on the year. A reading above-consensus would revive talk of a more aggressive RBA tightening. The 4.9 percent increase for Q4 producer input prices was well above the 1.4 percent rise in producer output prices released on Friday, suggesting that higher costs were being absorbed and not being passed onto consumers. Australian markets will be closed on Wednesday for Australia day. 00:24 01-24-00 Copyright 2000 Reuters Limited. |
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Australian Commodity Prices Rise as Global Growth Pace Quickens Sydney, Jan. 24 (Bloomberg) -- Australian commodity prices rose for the sixth month in the past seven in January, led by gains in liquefied petroleum gas, aluminum, copper and wool amid expectations world economic growth is gathering pace faster than earlier anticipated. The Dresdner Commodity Price Index gained 1.2 percent in the four and a half weeks ended Jan. 20 in special drawing rights, a neutral measure compiled by the International Monetary Fund using the world's major currencies. Commodities account for more than half the export earnings in Australia, the world's biggest exporter of beef, wool and coal. Dresdner's index is at its highest level in 18 months and about 14 percent higher than a year ago when commodity prices were in a slump amid recessions in much of Asia and sluggish growth in Europe. ``There's been almost a doubling of world growth over the last two years and that's why we think there's a lot of growth ahead for commodity prices,'' Rob Henderson, chief economist at Dresdner Kleinwort Benson investment bank in Sydney. London-based Consensus Economics, which gathers forecasts from the world's top economists, said earlier this month the so- called Consensus forecast for world growth in 2000 increased to 3 percent from its December forecast of 2.9 percent. World growth in 1999 was 2.5 percent and 1.7 percent in 1998, according to Consensus Economics. This growth will drive commodity prices higher as countries demand more raw materials for manufacturing industries, Henderson said. ``Inventories were quite high in the wake of the Asian crisis'' started in mid-1997 with recessions in countries including Thailand, as well as South Korea and Japan and dampened demand, Henderson said. ``We now think stockpiles have been run down to normal levels and that leaves more room for price rises,'' he said. Wool, Oil, Metals Australia's third biggest farm export, wool, helped drive the Dresdner Index higher. The widely watched eastern market indicator of wool prices rose 8 percent the past two weeks to a 18- month high of A$6.34 a kilogram, thanks to increasing demand from China and Italy, the two top customers for Australian wool. Wool prices tumbled to a five-year low in October 1997 as clothing demand in Asia slumped. The biggest contributor to the gain in the commodity index was liquefied petroleum gas, reflecting a surge in world crude oil prices amid freezing conditions in the U.S. and reduced supplies from major oil producing countries. Crude oil for February delivery touched a nine-year high US$29.95 a barrel before it expired last week on the New York Mercantile Exchange. Also helping push the Dresdner Index higher this month were gains in metals, especially aluminum and copper. On the London Metals Exchange, the world's most active exchange for trade in base metals, the price of aluminum is up 5.5 percent so far this year, to US$1,728 a metric ton. Copper has gained 2.8 percent since trading started Jan. 2 to US$1,918 a ton. Meantime, the London Metal Exchange's global stockpile for copper fell by 1,225 tons to 785,875 tons in the latest daily report Friday. In other base metal stockpiles, aluminum fell 925 tons to 765,475 tons and nickel fell 420 tons to 44,410 tons. Metals Prices Analysts are predicting more gains in metals prices as industrial production expands. ``Continued strong rates of OECD GDP growth indicate a growing demand for metals and stronger metal prices during the coming six months,'' Merrill Lynch investment bankers said in December. They forecast global growth in 2000 as fast as 4 percent, way ahead of Consensus. The more optimistic outlook for commodity prices helped push the Australian dollar to a six-month high 66.87 U.S. cents Jan. 13. The local currency is driven by expectations for commodity prices because the nation relies on commodities exports for about 58 percent of its income from overseas sales of goods and services. The currency, presently about 65.88 U.S. cents, is the fifth top performing currency in the world in the month to date. In Australian dollar terms, the Dresdner index fell 1.4 percent in January, reflecting the higher Australian dollar. Since most commodity prices are quoted in U.S. dollars for world trade, a rise in the Australian dollar against the U.S. dollar reduces the value of Australian commodity sales. The Dresdner Commodity Index, which is compiled in association with the National Farmers Federation, tracks 23 commodities, which account for about 70 percent of the value of Australian commodity exports. They include cotton, wheat, beef, wool, coal, gold, copper, aluminum and iron ore. Jan/23/2000 19:53 For more stories from Bloomberg News, click here. (C) Copyright 2000 Bloomberg L.P. |
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Australian dlr momentum slows, pullback possible |
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Australian Dollar Rises on Economic Outlook; NZ Dollar Gains |
| Australian dlr pauses, but holds near 6 month high By John Mair SYDNEY, Jan 14 (Reuters) - The Australian dollar rested around six month highs on Friday, consolidating its spectacular one cent jump, and heading towards its 1999 high above 67 cents. Comments from U.S. Federal Reserve Chairman Alan Greenspan that a U.S. rate rise was imminent did not upset the Aussie, as they were counterbalanced by expectations that the Reserve Bank would lift local rates by as much as 50 basis points after its February 1 board meeting. At 4:00 p.m. (0500 GMT) the Australian dollar <AUD=> was at $0.6661/66, its best close since July, from an early $0.6667/77 and Thursday's late $0.6629/34. While the Aussie was off its overnight six month high of $0.6688,it had held onto most of its rally from $0.6580 on Thursday. "A lot of the shorts have been shaken out by this move, so there could be a little bit more buying to go from that flow perspective," John Kyriakopoulos, Australian dollar strategist at JP Morgan, said. "There are some investors that are long, but I wouldn't say the overall market is very long." The break higher was sparked by strong employment data on Thursday that saw locals take the Aussie to three month highs above 66 cents. It was then extended another half cent in London and New York trade. It broke a downtrend at $0.6610/20 dating back to its 1999 high of $0.6745, reached in May, and capping rallies in July and October. That former resistance is now expected to be support on any retracement. After some consolidation, the Aussie is expected to make a move towards 67 cents and higher. "I think we will see it headed higher," Patrick Bennett, Warburg Dillion Read's director of currency strategy in Singapore, told Reuters Television. He said Warburg saw it at around 68 cents in the first half of 2000. In the near term there was the potential for a pull back to the mid-65 cents, but it should be well supported from there. "The numbers out of Australia are very, very strong, there was some current account deficit concerns last year but they seem to be in hand," Bennett said, adding an expected 100 basis points of tightening this year, starting with 25 points after the RBA's February 1 meeting, would be supportive. Kyriakopoulos had the Aussie at 67 cents by the end of the quarter and at 71 cents by the middle of the year, with the strength reflecting a reversal of market concerns on interest rates and Y2K risk that hurt it in the second half of 1999. "There is an expectation that the RBA could well be matching the tightening by the Fed, that's positive in the sense there won't be a further widening in the interest differential," he said. "And investors remain risk seeking, which is certainly supporting the currency." Expecations of strong global growth in 2000 lifting commodity prices are also expected to drive the Aussie higher. At its high the Aussie had rallied almost four cents, or 6.2 percent, from its December 3 low of $0.6300. Analysts see the strength continuing, with a Reuters survey of 10 forecasters finding an average forecast for the Aussie of $0.6820 in mid-2000 and $0.7025 by year end. The Aussie's gains also saw it up strongly on the crosses -- ending at 70.60/70 yen from Thursday's late 70.06/16, reaching a three month high just under 71 yen in between. In trade weighted terms the Aussie closed at 57.6 points, its best since since mid-August. It has risen almost five percent since its early December low of 54.9. 01:08 01-14-00 Copyright 2000 Reuters Limited. |
| Australian Dollar Holds Near 6-Month High on Economic Outlook New York, Jan. 14 (Bloomberg) -- The Australian dollar was little changed after a rally on Thursday pushed the currency to its current six-month high. The currency surged yesterday after labor statistics showed job growth was double expectations in December, boosting chances the Reserve Bank will soon raise rates by 50 basis points. Higher rates attract investors to a currency because of the prospect of better returns. The next hurdle is a report on consumer prices for the fourth quarter, out at month's end, analysts said. ``It's been understandable that it would rally, but it's hard to justify any further upside,'' said Sean Callow, currency strategist at IDEAglobal.com, in London. ``There's a lot of good news priced into'' the currency such as expectations for a half- point interest rate increase next month. The Australian dollar slipped for the first time in six days, to 66.67 U.S. cents from 66.79 U.S. cents late yesterday in New York. It rose as high as 66.87 cents yesterday, it's highest since July 8. The New Zealand dollar fell to 52.14 U.S. cents from 52.34 U.S. cents. Australian jobs figures showed the economy added 55,800 jobs in December, greater than expectations of a 20,000 increase. The Reserve Bank of Australia last increased interest rates Nov. 3, lifting its official cash rate 25 basis points to 5 percent. The central bank aims to keep inflation in a 2 percent to 3 percent target band. IDEAglobal.com's Callow said any signs of accelerating inflation in this month's consumer price reports may signal further tightening is on the way. Consumer price numbers for the fourth quarter are set for release on January 27, New York time. The New Zealand and Australian currencies are the best performers against the U.S. dollar for the last month, with the New Zealand dollar up 5.91 percent and the Australian dollar gaining 4.83 percent. Jan/14/2000 13:32 For more stories from Bloomberg News, click here. (C) Copyright 2000 Bloomberg L.P. |
| Currency Scorecard: Australian Dollar Gains Most in Week New York, Jan. 14 (Bloomberg) -- The Australian dollar registered the best performance against the U.S. dollar this week. The following table shows the best- and worst-performing major currencies against the dollar for the past week. BEST PERFORMING Australian Dollar +1.84% The Australian dollar surged to its highest level in six months Thursday, as investors bought the currency betting it will rise further as the economy enters its ninth year of expansion and the Central bank looks set to raise interest rates in February. South Korean Won +1.77% The central bank's annual statement on monetary policy Friday, led investors to believe that they will lean towards a stronger won in order to ward off inflation. Brazilian Real +1.39% The Brazilian currency rose to a three-week high after the government sold 500 million euros ($513 million) in 10-year bonds abroad, boosting the supply of hard currency in the country. Mexican Peso +1.14% The Mexican peso rose as investors poured capital into Mexico's stock market, increasing demand for the currency. WORST PERFORMING Swiss Franc -1.78% The Swiss franc fell against the dollar as a rise in Swiss interest rates failed to attract investors from regions where returns are higher. Greek Drachma -1.70% The drachma dropped with the euro, as Greece is attempting to become the 12th member of the euro-zone this year. Danish Krone -1.56% The krone fell along with the euro, to which it is tied through an exchange-rate mechanism. EURO -1.49% The euro fell against the dollar as an unexpected decline in German factory output dampend optimism for faster growth in the 11- nation region that uses the currency. Jan/14/2000 13:37 For more stories from Bloomberg News, click here. (C) Copyright 2000 Bloomberg L.P. |
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The information contained here was gathered from sources deemed reliable, however, no claim is made as to its accuracy or content. This does not contain specific recommendations to buy or sell at particular prices or times, nor should any of the examples presented be deemed as such. There is a risk of loss in trading futures and futures options and you should carefully consider your financial position before making any trades. Furthermore, no representation is being made that any of the examples shown resulted in actual trades or will result in actual trades. |
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