Aust dollar weaker at noon hitting six-week low
21 Jan 2009 12:45 PM
SYDNEY, Jan 21 AAP - The Australian dollar was weaker at noon as heavy financial sector losses dashed hopes that US President Barack Obama's inauguration would restore optimism.
At 1200 AEDT, the Australian dollar was trading at $US0.6490/95, down 1.7 per cent from Tuesday's close of $US0.6603/08.
During the morning, the currency moved between a six-week low of $US0.6454 and an early high of $US0.6510.
The Australian dollar extended its losses in morning trade, touching lows last seen on December 5, as traders reacted to the slump in equity markets.
Wall Street's S&P 500 index finished 5.28 per cent weaker as the share price of the world's largest institutional money manager, State Street Corporation, fell by almost half in New York trade.
Shares in the Boston-based firm plummeted 48 per cent after the company reported that its net income in the fourth quarter of 2008 was 71 per cent weaker compared with a year earlier.
Asian equity markets weakened on the news, with Japan's Nikkei index falling more than two per cent in morning trade.
Easy Forex senior dealer Francisco Solar said bad news about the US and UK banking sector had battered demand for high-risk currencies such as the Australian dollar.
"At the moment, things are still quite a bit pessimistic," he said.
"People were expecting some sort of Obama rally but the data we have seen of late has been quite dire.
"This doesn't leave risk sentiment currencies like the Aussie on a good footing."
The Australian dollar fell to its daily low before the Westpac-Melbourne Institute consumer sentiment index was released, showing a 2.2 per cent fall in January.
Mr Francisco said the dire consumer report, following news that the Royal Bank of Scotland had suffered the biggest annual loss in UK corporate history, had reaffirmed the market's negative sentiment.
"The markets are expecting further negative news: it's a very sentiment-driven market," he said.
The Australian dollar was expected to test a new low at $US0.6415 on Wednesday.
CURRENCY TABLE: Currency snapshot at 1200 AEDT
CURRENCY SPOT PREVIOUS CLOSE
AUD/USD 0.6490-95 0.6603-08
AUD/JPY 58.34-40 59.61-68
AUD/EUR 0.5034-44 0.5077-83
AUD/NZD 1.2465-86 1.2382-98
AUD/GBP 0.4672-82 0.4627-36
EUR/USD 1.2885-88 1.3005-08
USD/JPY 89.89-90 90.27-29
EUR/JPY 115.84-88 117.40-43
(*Closes taken at 1700 AEDT Previous local session)
At 1200 AEDT, the Reserve Bank of Australia's trade weighted index was at 53.7, down from Tuesday's close of 54.4.
The Australian bond market was mixed at noon, with three-year futures contract prices firming.
At 1200 AEDT, the yield on the Commonwealth Government March 2019 bond was at 4.005 per cent, up from Tuesday's close of 3.998 per cent, while the yield on the April 2012 bond was at 3.050 per cent, down from 3.120 per cent.
On the Sydney Futures Exchange, the March 10-year bond futures contract price was 95.995, down from Tuesday's close of 96.000, while the March three-year bond futures contract price was at 96.955, up from 96.890.
SECURITY YIELD PREVIOUS CLOSE
CGS 5.25 pct Mar 2019 4.005 3.998
CGS 5.75 pct Apr 2012 3.050 3.120
90-day bank bill rate 3.610 3.615
180-day bank bill rate 3.337 3.445
Sydney Futures Exchange
CONTRACT PRICE PREVIOUS CLOSE
Mar 2009 10-yr bond futures 95.995 96.000
Mar 2009 3-yr bond futures 96.955 96.890
Mar 2009 bill futures 96.970 96.890
Jun 2009 bill futures 97.340 97.210
