Dollar struggles to stay on top
The Australian dollar is slightly lower, after an earlier rise based on positive commentary from the Reserve Bank of Australia (RBA).
At 0700 AEST on Wednesday, the local unit was trading at 104.84 US cents, down from 104.93 cents on Tuesday.
Boris Schlossberg managing directorat BK Asset Management said optimistic RBA commentary had influenced the local currency overnight.
“It moved quite high overnight on relatively hawkish RBA minutes, which suggested that the bank is not going to move on rates for the foreseeable future,” Schlossberg said.
“But, there are two downside forces that are weighing on the Aussie.
One is the massive re-adjustment in the euro Aussie cross-rate.
“Then, there was a fall-back in risk appetite in the North American session.”
In the minutes of its August 7 meeting – released on Tuesday – the RBA noted improvement on the domestic economy, and stabilisation in China, hinting that the reserve bank might not need to cut the cash rate in the near future.
This pushed the Aussie dollar above 105 US cents on Tuesday.
Schlossberg said global equity markets would be the main influence on the Australian dollar, adding it would probably trade within a tight range on Wednesday.
“The Aussie currency is having a hard time climbing back towards that 105 (US cent) mark, so if we see any weakness in equities, it could fall further,” he said.
“The focus at the moment is on the resolution in Europe, and what the ECB (European Central Bank) is going to do, so risk currencies have taken a back seat for the moment.”
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