Dollar opens below parity

Wall Street is falling back from record highs overnight as retail markets pose a slight gain. Commsec report

Australian Money Source: Supplied

THE Australian dollar has remained below parity with the greenback as healthy American retail data underpinned strength in the US currency.

At 12pm AEST today, the Australian dollar was trading at 99.77 cents, down almost a quarter of a US cent from yesterday's close of 100 US cents.

The local unit fell last night, and continued to struggle this morning, after US Commerce Department data showed a retail sales jump of 0.1 per cent during April. While the rise was unspectacular, it was more upbeat than market forecasts of a 0.3 per cent drop, boosting the US dollar against most major currencies.

"At the moment, the market's quite sensitive to any sort of positive US news," OzForex chief currency strategist Jim Vrondas said. "We've seen them get long buying US dollars."

Still, Mr Vrondas said, the Australian dollar could briefly rise above parity with the US currency, to 101 US cents tonight, if Treasurer Wayne Swan's sixth budget is less draconian than financial markets expect.

"The expectations are it's going to be relatively tough, but maybe not as tough," he said, adding that traders would "sell on a rally" if the Australian dollar rose above 100 US cents.

The market has overlooked lending finance data for March, showing a 5.8 per cent rise in owner-occupier home loans.

Meanwhile, the Australian bond market was firmer at noon. At 12pm AEST today, the June 10-year bond futures contract was trading at 96.775 (implying a yield of 3.225 per cent), up from 96.750 (3.250 per cent) yesterday. The June three-year bond futures contract was at 97.440 (2.560 per cent), up from 97.410 (2.590 per cent) previously.

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Dollar below parity with US greenback

Wall Street is falling back from record highs overnight as retail markets pose a slight gain. Commsec report

Australian Money Source: Supplied

THE Australian dollar has remained below parity with the greenback as healthy American retail data underpinned strength in the US currency.

At 12pm AEST today, the Australian dollar was trading at 99.77 cents, down almost a quarter of a US cent from yesterday's close of 100 US cents.

The local unit fell last night, and continued to struggle this morning, after US Commerce Department data showed a retail sales jump of 0.1 per cent during April. While the rise was unspectacular, it was more upbeat than market forecasts of a 0.3 per cent drop, boosting the US dollar against most major currencies.

"At the moment, the market's quite sensitive to any sort of positive US news," OzForex chief currency strategist Jim Vrondas said. "We've seen them get long buying US dollars."

Still, Mr Vrondas said, the Australian dollar could briefly rise above parity with the US currency, to 101 US cents tonight, if Treasurer Wayne Swan's sixth budget is less draconian than financial markets expect.

"The expectations are it's going to be relatively tough, but maybe not as tough," he said, adding that traders would "sell on a rally" if the Australian dollar rose above 100 US cents.

The market has overlooked lending finance data for March, showing a 5.8 per cent rise in owner-occupier home loans.

Meanwhile, the Australian bond market was firmer at noon. At 12pm AEST today, the June 10-year bond futures contract was trading at 96.775 (implying a yield of 3.225 per cent), up from 96.750 (3.250 per cent) yesterday. The June three-year bond futures contract was at 97.440 (2.560 per cent), up from 97.410 (2.590 per cent) previously.

View the original article here

Dollar below parity with US greenback

Wall Street is falling back from record highs overnight as retail markets pose a slight gain. Commsec report

Australian Money Source: Supplied

THE Australian dollar is holding below parity with the US greenback following better-than-expected American retail sales data.

At 7am AEST today, the local currency was at 99.53 US cents, almost half a US cent below yesterday's close of 100 US cents.

Today, the local currency started the trading session below parity with the US unit for the first time in 11 months, as a 0.1 per cent rise in American retail sales for April buoyed the greenback.

Bank of New Zealand currency strategist Mike Jones said the unexpected result, which beat forecasts of a 0.3 per cent drop, dealt a blow to the Australian dollar.

"The Aussie stands out as the weakest link on currency markets overnight," he said. "Generally speaking, it's been relatively quiet but Aussie dollar weakness has been eye-catching."

"It's more a US story than an Aussie-specific story."

The fall also follows a 9.3 per cent rise in Chinese industrial output for April, which was below the 9.5 per cent level expected by economists.

Mr Jones said the Australian dollar was likely to stay below parity with the US greenback today, ahead of the federal budget.

"Today's session probably is going to be all about consolidation for the Aussie dollar."

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Dollar heading towards parity

THE Australian dollar has tumbled almost two US cents to its lowest level in more than 11 months and could move back below parity with the greenback in the next 24 hours.

The currency fell to 100.47 US cents early today, its lowest level since June 2012.

But at 7am AEST today, the Australian dollar had recovered some ground and was trading at 100.92 US cents, but was still well down from 102.43 US cents yesterday afternoon.

Bank of New Zealand currency strategist Mike Jones said the sharp fall was the result of a surge in the value of the US dollar against all major currencies.

"Currency markets have certainly exploded into life," he said. "Investors have bought the US dollar with gay abandon and the Aussie dollar has been caught up in that; it's copped an absolute hiding."

He said the rally in the US dollar came after the greenback pushed above a key level against the Japanese yen.

"A lot of investors were waiting for the US dollar to break above 100 yen and now that has happened it's prompted a piling back of big investors into the US dollar."

Mr Jones said the Australian dollar may regain some ground early today as investors took profits after the sharp fall but, he added, it could move lower later in the day, possibly dropping below 100 US cents tonight.

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Dollar heading towards parity

Source: AFP

THE Australian dollar has plummeted almost two US cents and could be on its way back below the 100-US cent mark for the first time in nearly a year.

The dollar tumbled overnight as investors piled into its US counterpart, pushing the greenback sharply higher against all major currencies.

"Currency markets have certainly exploded into life," Bank of New Zealand currency strategist Mike Jones said. "Investors have bought the US dollar with gay abandon and the Aussie dollar has been caught up in that; it's copped an absolute hiding."

The Australian dollar fell to 100.47 US cents early today, its lowest level since June 2012. It has since recovered some ground but is well down from the 102.43 US cent level it was trading at yesterday afternoon.

Mr Jones said the dollar could move below parity with the US dollar as early as tonight.

Easy Forex senior currency dealer Francisco Solar also thought the dollar wais headed back below 100 US cents.

"Definitely parity is on the horizon and possibly below," he said.

Commsec economist Savanth Sebastian did not expect the dollar to move below parity in the short term but said it would move lower as the US economy improved. He said a move lower was good news for the Australian economy but bad for consumers.

A lower dollar would push fuel prices higher and make it harder for retailers to discount imported goods, he said.

"But it would support the export sectors like manufacturing and agriculture," he said. "And, it may just mean that Australians are more likely to travel interstate than overseas, which will have a positive economic impact."

Economists and currency experts point to a number of possible reasons for the fall, including rising expectations the US will wind back some of its stimulus efforts - which would be good for the US currency - and a move higher in the greenback against the Japanese yen. The US dollar moved above 100 yen for the first time in more than four years overnight, which may have prompted large-scale investors to buy the greenback, pushing it higher against all currencies.

Mr Solar said a weaker outlook for the Australian economy and expectations of further interest rate cuts, along with signs of improvements in the US economy also made the dollar less attractive to investors.

"The reasons why the Aussie went up are the reasons it has gone down again," he said.

Meanwhile, a number of big name investors have backed a fall in the dollar. Billionaire investor George Soros reportedly bet $1 billion on a fall in the dollar against the greenback earlier this week, while high profile hedge fund manager Stanley Drunkenmiller said the currency was "expensive".

"We think the Australian dollar will come down and will come down hard," he said according to Bloomberg.

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