Australian Dollar Falters Amid Lacklustre Market and Mixed Economic Data

Strategic Insights -

The Australian dollar suffered a downturn yesterday due to a lacklustre market and mixed economic data. Despite attempts by New Zealand dealers to profit from its low point, the dollar managed to resist and recover to some extent due to a rally in Commonwealth long bonds. The dollar closed at 71.86 US cents, a decline from Monday's close of 72.05 US cents.

Key Takeaways:

  • The Australian dollar faltered due to a lacklustre market and mixed economic data, closing at 71.86 US cents, a decline from Monday's close of 72.05 US cents.
  • Commonwealth long bonds rallied, with benchmark September 2004 bonds firming to 7.22 per cent from 7.31 at the previous close, and March 1997 bond series recovering to 6.40 per cent from 6.51 previously.
  • Two US investment houses were behind the push that took the dollar to its day's peak of 71.95 US cents, citing the possibility that key domestic economic data would prove stable.
  • Foreign exchange dealer Tim Langdon noted that reports of Japan's plans to sell 90 tonnes of gold (worth about $US1.5 billion) this year contributed to the dollar's volatility.
  • The Reserve Bank's trade-weighted index showed the dollar easing from 54 points to 53.9 points.
  • Domestic credit markets also fluctuated, with the 90-day bank bill rate dropping to 4.84 per cent and physical 180-day paper gaining one basis point to finish at 4.95 per cent.

Statistics:

  • The dollar closed at 71.86 US cents, a decline from Monday's close of 72.05 US cents.
  • Commonwealth September 2004 bonds rallied from 7.31 to 7.22 per cent.
  • March 1997 bond series recovered from 6.51 to 6.40 per cent.
  • The Reserve Bank's trade-weighted index showed the dollar easing from 54 points to 53.9 points.
  • The 90-day bank bill rate dropped from 4.80 to 4.84 per cent.
  • Physical 180-day paper gained one basis point to finish at 4.95 per cent.

Sources:

  • "Dollar faltered yesterday amid lacklustre market: For further information, contact a dealer through BF&B."
  • "Commonwealth bond outlook looking brighter: By Marcia Ericsson, Thursday, April 15, The Australian Financial Review."