1 August 2003, 10:32  Bruised Aussie wobbly below 65c, awaits US data

SYDNEY, Aug 1 - The Australian dollar stalled below 65 U.S. cents on Friday after tumbling below the figure for the first time in nearly two weeks overnight as the greenback charged higher on upbeat U.S. data. Figures showing U.S. gross domestic product expanded a better-than-expected 2.4 percent annual rate in the second quarter reinforced recent optimism on the U.S. economy, raising the allure of the U.S. dollar. That drove the Aussie down to a two-week low of US$0.6462 overnight but caution ahead of key U.S. non-farm payrolls and manufacturing data due later on Friday kept the Aussie tightly range-bound in local trade. "Not too many people want to get involved today because they want to see if the non-farm payrolls back up the GDP data," said Jonathan Prince, National Australia Bank manager forex sales. After trading in a slim range roughly between US$0.6472 and $0.6498, the Aussie settled at $0.6472/77 by 4:00 p.m. (0600 GMT), down 0.8 percent from Thursday's close of $0.6526/31. It has lost 5.5 percent since reaching a five-year high of $0.6848 on July 7. Against the other majors, the Aussie was softer against the Japanese currency at 77.92 yen but firmer against the single European currency at 0.5771 euro. Analysts said the risks for the Aussie against the U.S. dollar were skewed towards the downside, especially given that technicals have turned bearish after an outside-range month in July. "The market also wants to buy U.S. dollars," NAB's Prince added. "People have bought the U.S. dollar for the reflation idea and if we get fresh momentum on that trade, then I think the Aussie will struggle." While the near-term outlook for the Aussie appeared grim, some analysts expect better price action further out. "Stronger global growth, relatively high domestic interest rates and a stronger domestic economy should see the Aussie drift higher later in the year," said Commonwealth Bank Senior Strategist Craig James. A string of robust local data released this week has all but wiped out the chance of a rate cut by the Reserve Bank of Australia at next week's policy-setting meeting. Twenty economists polled by on Friday have given a median 25 percent chance of a rate cut next week. Double click [AU/INT] for results. That would keep Australia's 4.75 percent cash rate as one of the highest among industrialised countries.

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