Trade Resources Economy Dollar Remained Below Parity with Greenback as Fed Talk Buoys US Currency

Dollar Remained Below Parity with Greenback as Fed Talk Buoys US Currency

The dollar remained below parity with the greenback as speculation about a winding back of US quantitative easing buoyed the American currency.

The Australian dollar fell below 100 US cents shortly after 9am AEST today, repeating its Saturday morning drop. At 12pm AEST the dollar was trading at 99.97 cents. However, that was higher than its intraday low of 99.76 US cents.

CMC Markets foreign exchange dealer Tim Waterer said the Australian dollar's weakness was continuing after a weekend Wall Street Journal article by chief economics correspondent Jon Hilsenrath that suggested the Federal Reserve would wind back its quantitative easing policy of buying US Treasury bonds.

“It's a general theme of a dominate US dollar,'' he said. “That follows ... growing speculation that the Federal Reserve may pull the reins on the asset purchase program sooner than currently priced into the market.''

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The Australian dollar's fortunes this afternoon hinge on official Chinese industrial production and retail sales data for April. Any sign of weakness within Australia's biggest trading partner could send the Aussie below 99.50 cents, for the first time in 11 months. But, a firm result could bring the local currency above parity, he said.

“This one will be closely watched to see which camp it falls in, whether it's the Chinese economy on an upswing or if it has, in fact, hit a soft patch.''

Currency traders appeared to overlook official Australian housing finance data for March showing a 5.2 per cent increase.

Source: http://www.theaustralian.com.au/business/markets/australian-dollar-below-us1-as-fed-talk-buoys-us-currency/story-e6frg94o-1226640971390
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Australian Dollar Below $Us1 as Fed Talk Buoys US Currency
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