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THE dollar opened more than half a US cent weaker, weighed down by rumours of China raising interest rates as soon as today. At 7am AEDT the currency was trading at $US0.7900/05, compared with yesterday's close of 0.7960/64. The dollar again pushed towards $US0.8000 overnight, trading as high as 0.7982, but quickly sold off in a bout of profit taking, falling to a low of $US0.7872. The currency yesterday found support from stronger-than-expected retail data but was met with resistance, pushing the local unit into the red at the close. Macquarie Bank currency strategist Jo Masters said the dollar had again weakened despite a softer US dollar. The local unit initially rallied to its highs after comments made by Japanese Prime Minister Junichiro Koizumi on diversification of Japan's asset reserves sparked a US dollar sell off. Clarification of the comments later in the day helped stem the loss and started a round of profit taking on the dollar. However, rumours of China looking to raise interest rates as soon as today sent the local unit even lower to at one stage be down almost one US cent. "Everyone downgraded their forecast on China, commodity prices turned around heavily, and the Aussie not long afterwards fell," Ms Masters said. "Commodity prices were a bit off overnight, oil lost $1.50, and copper and aluminium were also slightly lower." Ms Masters said China has been driving the commodity cycle, so if China slowed demand, commodities slowed, removing support for the dollar. "A lot of medium term buying of the Aussie over the last four weeks have been driven by expectations of a booming commodity cycle," she said. [ Last edited by 休 on 2005-3-11 at 08:24 AM ] |
