Currency Traders Sell Australian Dollars

The Australian dollar has closed below 0.8000 against the US Dollar for the first time in more than a year as a surprise drop in the jobless rate failed to give the currency a sustained boost.
A bigger than expected New Zealand interest rate cut drained momentum from the Australian dollar as foreign Exchange traders dumped high-yielding currencies.

The Australian dollar was trading at $US0.7954/57, down from yesterday's close of $US0.8075/79, marking the third successive weaker finish. This was the unit's lowest closing level since August 17, 2007 when the Australian dollar finished at $US0.7741/47.

During the day, the local currency traded between a late morning low of $US0.7945 and an early afternoon high of $US0.8020. The Australian dollar finished below 86 Japanese yen for the first time since July 2006.

The domestic currency struggled after the Reserve Bank of New Zealand cut interest rates this morning by a bigger than expected 50 basis points, taking the cash rate to 7.5 per cent.

"The Aussie dollar did open up this morning under pressure, tracking the Kiwi dollar,'' Easy Forex currency dealer Anthony Botros said. "It's been a concept in the market that because they're neighbouring currencies they do tend to track each other.''

The Australian dollar rose above $US0.8000 in late morning trade from its daily low, after Australian Bureau of Statistics data showed the jobless rate in August falling by 0.2 percentage points to a five-month low of 4.1 per cent.

The seasonally adjusted data was better than market forecasts of a 4.4 per cent unemployment rate for last month, and helped the Australian dollar step above $US0.8000. Mr Botros said traders saw the noon rally as a chance to sell the Australian dollar.

"The (labour market) figures were relatively good but they don't show much of a correlation to recent commentary from the Reserve Bank regarding ... a slowing economy even though interest rate easing will be subdued,'' he said.

Reserve Bank of Australia governor Glenn Stevens told a parliamentary economics committee on Monday that he expected the jobless rate to rise above five per cent in the next 12 to 18 months as the economy slowed.

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