Australian Dollar Outlook steady for 2011

THE Australian dollar has ended lower as investors dumped risk assets following a slump on Asian equity markets.

At 5pm australian dollar exchange rate was trading at 98.79 US cents, down from Friday's close of 99.00 cents. Shortly after, the local unit traded between 98.65 US cents and 98.90 cents. UBS interest rate strategist Matthew Johnson said the australian currency moved sideways during domestic trade. "The australian currency is trading in such a small range due to low levels of liquidity," Mr Johnson said.

He said there had been a slight move towards safe haven assets due to increased tensions on the Korean peninsula and falls in equities. The Australian share market finished the day weaker after sagging bank stocks outweighed gains to the energy sector.

The Australian bond market ended firmer after investors moving into safe haven assets as military tensions on the Korean peninsula increased.

The Australian dollar closed at 82.86 yen, down from 83.18 on Friday and at 75.07 euro cents from 74.56 previously. At 4.30pm AEDT on the ASX 24, the March 10-year bond futures contract was at 94.430 (implying a yield of 5.570 per cent), up from Friday's close of 94.365 (5.635 per cent). The March three-year bond futures contract was at 94.730 (5.270 per cent), up from 95.700 (4.300 per cent).

Mr Johnson said Australian bonds were relatively flat after a rally in US Treasuries. "Weaker equities have caused US Treasuries to rally and Australian bonds have followed suit," Mr Johnson said.

"The ten years have been stronger than the three years, given the offshore factors. There's a little more tension on the Korean peninsula, so there's been a move away from risk on the equity market."

Mr Johnson said bonds would continue to trade in a narrow range in the lead-up to Christmas. "At this time of the year you'd expect the thin trading volumes."

The 90-day bank bill closed at 4.980 per cent down from 5.020, while the 180-day bank bill closed at 5.170, down from 5.210.

At 4pm AEDT, the RBA's trade weighted index was unchanged from Friday's close of 74.8.

Read more: www.news.com.au

Pounds to Australian Dollars = 1.5700
Euros To Australian Dollars = 1.3300
Australian Dollars to US Dollars = 1.0000
Australian Dollars to New Zealand Dollars = 1.3300

Bye For Now

IMS Foreign Exchange
Buying Australian Dollars? Buy Australian Dollars at the Best Australian Dollar Rates!

Buy Travel Money Australian Dollars?

Contact IMS Foreign Exchange + 44 207 183 2790

Overseas Money Transfers