/www.fxserver.com/ February 14, 2003
THE Australian dollar added half a US cent today after risk aversion trade sent the US dollar tumbling overnight.
At 1200 AEDT, the dollar was at $US0.5948/53 compared with $US0.5898/03 at yesterday's close.
The unit traded strongly overnight, reaching as high as $US0.5673, as the US and UK were put on a heightened state of alert.
"We pushed through 59.60 last night which is a big level," National Australia bank strategists Michael Jansen said.
"But in many ways it seemed to be false because it didn't carry on, there wasn't a great deal of momentum after the break and the buying wasn't all that heavy.
"So we figured that the market would be a little bit long opening this morning and maybe soften down to the 59.40 level.
"But in the event it's held up quite nicely, the low has only been 59.50, so that's very positive.
"As long as it stays here it's probably shaped to move higher."
Having said that trading was generally quiet, and the Australian dollar was currently stuck between $US0.5950 and 0.5957.
Mr Jansen said investors were being cautious ahead of tonight's United Nations weapons inspectors report on Iraq.
He said the Australian dollar would struggle to move while risk aversion trade remained high.
Traditionally, investors steer clear of peripheral currencies such as the local currency during times of uncertainty.
At 1200 AEDT the Australian dollar on the Reserve Bank of Australia Trade Weighted Index was at 54.0 from 53.7 points at yesterday's close.