Dollar rebounds

 

grid, data, money, dollarSome weak US economic data has helped the Australian dollar rebound after it dropped below 85 US cents for the first time in four years.

At 0700 AEDT on Thursday, the local unit was trading at 85.52 US cents, up from 85.41 cents on Wednesday.

On Wednesday evening, it dropped as low as 84.80 US cents, its weakest level since July 2010, after Reserve Bank of Australia deputy governor Philip Lowe on Tuesday night said the cash rate could be cut again if necessary.

However, the Aussie bounced back overnight after the US dollar came under pressure following the release of disappointing US employment figures.

Weekly claims for US unemployment benefits rose to its highest level since the first week of September and the University of Michigan consumer confidence was slightly worse than expected.

BK Asset Management MD, Boris Schlossberg, said the Australian currency had been under pressure all week.

“Just last week it appeared that the Aussie may stabilise as investors parked their funds in the unit hoping to collect some yield in quiet pre-holiday markets,” he said.

“However, the events of the past few days have dislodged much of the speculative capital from the currency and helped to accelerate the selling today.”

Australian September quarter business investment figures will be released on Thursday, and are likely to show a fall in expenditure in the mining and resources sector.

AAP

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