Australian Dollar Weakens Against Majors As Equities Fall

Australian Dollar Weakens Against Majors As Equities Fall


The Australian dollar was generally weak against other major currencies on Wednesday in Asia as domestic equities fell on global growth concerns.
The benchmark S&P/ASX 200 index dropped 0.3 per cent, or 13 points, to 4346.50 in early afternoon trading. Australia's All Ordinaries was down 0.22 percent, or 9.80 points, to 43.77.20.
Traders are reluctant taking positions in risk-associated assets ahead of key remarks by Federal Reserve Chairman Ben Bernanke at the Kansas City Federal Reserve's Jackson Hole symposium on Friday.
Market started to speculate some concrete actions from the ECB after its President Mario Draghi chose to stay away from this week's annual Jackson Hole Symposium in Wyoming "due to heavy workload foreseen for the next few days".
The European Central Bank will hold its next meeting in Frankfurt on Sept. 6 and the market is expecting hints on the proposed bond-buying program from troubled eurozone countries such as Italy and Spain in order to reduce borrowing costs.
In economic news, official data showed today that Australia's construction work completed in the second quarter fell 0.2 percent from a 5.5 percent growth recorded in the previous quarter. Analysts had expected a 0.5 percent growth.
Successful bill auction in Spain lifted the euro in previous sessions, with Spanish treasury selling EUR 3.6 billion of bills, exceeding it's maximum target of EUR 3.5 billion with a sharp fall in yield.
Yield on 3-month bills dropped to 0.946 percent, down from 2.434 percent in July. Yield on 6-month bills fell to 2.026 percent, down from 3.691 percent last month.
The Australian dollar slipped to 1.2130 against the euro at the beginning of the session, its lowest level in nearly 8-weeks. Bias for further aussie selling is solid given the euro-aussie cross is approaching the 38.2 percent retracement level at 1.2160.
The aussie inched lower to 1.0358 against the US dollar, down from 1.0379 hit late New York Tuesday. The near-term direction for the aussie is seen quite bearish and the pair is expected to re-test yesterday's low of 1.0347.
The Australian dollar also drifted lower to 81.41 against the yen and 1.2883 against the New Zealand dollar in early Wednesday Asian deals, down from session's highs of 81.57 and 1.2903, respectively. The near-term support levels are seen at 81.20 against the yen and 1.2870 against the kiwi.
Looking ahead, French business confidence indicator, Swiss KOF leading indicator, Italian consumer confidence, German CPI-all for August and Italian retail sales for June are expected to garner market attention in the European session.
The U.S. GDP for the second quarter, pending home sales for July and the Federal Reserve's Beige book economic survey are the key data to watch in the North American session.



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