Thursday, August 31, 2006

Currency opens on steady note

THE dollar opened slightly higher today after see-sawing with the US dollar overnight, while traders prepare for today's local current account deficit.

At 0700 AEST the local unit was trading at $US0.7637/41, similar to yesterday's close of 0.7631/33.

Overnight it reached a low of $US0.7610 and a high of 0.7649.

The local unit managed to hold some of its overnight gains despite moving lower against the US dollar.

ICAP's head of economics and strategy Michael Thomas said the local unit rose against the US dollar early on but fell back as the US unit gained on the back of positive economic data.

"Early on the euro was the strongest currency and that was off the back of ECB (European Central Bank) signalling they would put rates up," he said.

"But the US dollar did come back and we have seen a simular pattern with the Aussie dollar."

Today the current account deficit for the June quarter is due which will might attract some interest if its a fair way from expectations, Mr Thomas said.

"Typically, it's something that moves the Aussie dollar around a little bit, however, the other numbers on (Wednesday and Thursday) were very near expectation that they really did no move the market at all," he said.

Economists have estimated the current account deficit to remain at about $14 billion in the June quarter following a deficit of $13.999 billion in the March quarter.

This is equal to 5.7 per cent of gross domestic product (GDP).

Mr Thomas also said commodities are starting to "wobble around again" and with many traders coming back after northern hemisphere summer holidays, and that a move or new trend will likely be more sustained with more.

"I suspect next week that moves we see will be longer lasting than what we have seen over the last couple of weeks," he said.

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