Dollar starts to claw back losses

 

puzzle, dollar, moneyThe Australian dollar is slightly higher after bouncing from a three week low.

At 0700 AEST on Thursday, the local unit was trading at 92.51 US cents, up from 92.34 cents on Wednesday.

In the early hours of Thursday morning it dropped as low as 92.06 US cents, its weakest level since May 2.

The minutes of the US Federal Reserve’s latest meeting, released early on Thursday morning, showed no change to its interest rate outlook or the tapering of its bond purchases.

BK Asset Management MD, Kathy Lien, said there was no sustained reaction to the Fed minutes on currency markets.

“The US dollar rallied initially in response because some members discussed a clearer policy signal and tools for normalisation but the gains fizzled quickly,” she said.

Lien said the Australian dollar spent most of the overnight session in negative territory before its rebound.

“Weaker domestic factors kept pressure on the commodity dollars with the Australian dollar hit by a surprisingly large decline in consumer confidence,” she said.

Westpac’s consumer confidence index dropped 6.8 per cent in May after growing 0.3 per cent the previous month.

The survey was conducted in the week following of the federal budget, which most of those surveyed said would hurt family finances.

“Even though the Australian government has gone to great lengths to prepare the market for fiscal tightening, consumers were nonetheless dissatisfied by the recent announcements and worried about the impact on the economy,” Lien said.

Local markets on Thursday will be focusing on the release of the May HSBC Chinese manufacturing data, which comes out just before midday.

AAP

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