Aust dollar closes firmer for first time in 5 days
14 Jan 2009 5:40 PM
SYDNEY, Jan 14 AAP - The Australian dollar closed firmer for the first time in five days as a rally on Asian share markets and a jump in copper prices convinced traders the currency had been oversold in recent days.
At 1700 AEDT, the Australian dollar was trading at $US0.6799/03, up half a US cent from Tuesday's close of $US0.6744/49.
The currency last closed stronger on January 9, when the unit gained 0.2 of a US cent to end the session at $US0.7081.
During the day, the local currency moved between an early low of $US0.6617 and a late high of $US0.6785.
The domestic currency opened weaker on Wednesday, after hitting a one-month low under $US0.6600 during offshore trade, but it began to recover in the early afternoon as traders responded to a recovery in Asian share markets and key commodity prices.
National Australia Bank currency strategist John Kyriakopoulos said the Australian dollar climbed soon after midday as traders realised the currency had been oversold in recent days.
"Quite simply, the currency had fallen sharply and over shot and the market found itself short," he said.
While US equity markets were flat on Tuesday night, Asian share markets rallied with Hong Kong's Hang Seng index rising 1.3 per cent.
Meanwhile, copper prices rose by four per cent, another factor which convinced traders the Australian dollar had been oversold.
"We had overshot some of these fundamental drivers," Mr Kyriakopoulos said.
Foreign exchange markets appeared to overlook official data showing housing finance commitments for owner-occupiers rose 1.3 per cent in November, seasonally adjusted, the second successive month of gains.
The Australian dollar was expected to make gains during offshore trade but Mr Kyriakopoulos said the currency would face pressure on Thursday if official labour force data showed a bigger than expected job losses tally for December.
While economists are predicting 20,000 retrenchments, Mr Kyriakopoulos said the domestic currency could shed up to two US cents if the Australian Bureau of Statistics data showed more than 30,000 job losses for the last month of 2008.
CURRENCY TABLE: Currency snapshot at 1700 AEDT
CURRENCY SPOT PREVIOUS CLOSE
AUD/USD 0.6799-03 0.6744-49
AUD/JPY 61.04-10 60.27-31
AUD/EUR 0.5111-19 0.5086-93
AUD/NZD 1.2163-73 1.2036-56
AUD/GBP 0.4655-62 0.4577-85
EUR/USD 1.3295-97 1.3257-60
USD/JPY 89.77-79 89.33-36
EUR/JPY 119.37-39 118.43-47
(*Closes taken at 1700 AEDT Previous local session) At 1600 AEDT, the Reserve Bank of Australia's trade weighted index was at 54.9, down from Tuesday's close of 55.2.
AAP saj/dlm
