4 August 2003, 10:33  Aussie retains offshore gains, holds above 65c

SYDNEY, Aug 4 - The Australian dollar hovered just above 65 U.S. cents in quiet dealings on Monday, failing to make the most of a soft greenback amid a lack of fresh impetus. A bank holiday in Sydney, an absence of major local data and a lack of action among the majors kept the Aussie trapped in a very slim range between US$0.6505-6524, unable to extend the rebound from a two-week low of $0.6444 made late on Friday. "It's a day to catch up on paperwork," a trader at a local bank quipped. By 4:00 p.m. (0600 GMT), the Aussie was at US$0.6519/24, barely changed from early levels but still up 0.7 percent from Friday's close of $0.6472/77. On the crosses, it was up 0.3 percent at 78.17 yen and 0.2 percent at 0.5782 euro. Data released late Friday showing a fall of 44,000 U.S. non-farm payrolls in July when an increase of 18,000 was forecast had dented U.S. dollar sentiment as it disappointed investors who had been hoping for a clear sign of a pickup in U.S. growth. "The employment data clearly points to an underlying problem for the U.S. economy. Growth is probably improving but question is will it generate jobs and will it generate enough jobs to keep the economy growing at a pace that they want," said Greg Gibbs, RBC senior currency strategist. Other U.S. data showing an increase in U.S. manufacturing activity and more upbeat U.S. consumer sentiment also failed to meet the approval of investors following the recent build up of optimism on the U.S. economy. Gibbs said the rebound in the Aussie has helped improve the bearish technical picture for the commodity currency which only last week looked as if it was heading for a test of 64 cents. "Looks like it may have turned around," Gibbs said, adding the Aussie appeared to have established a double-bottom on the chart. "We'll probably head back towards 66 for the Aussie, $1.15 on the euro." Second-tier data released earlier in the day showing a 1.4 percent rise in newspaper job advertisements in July and a 12.5 percent jump in internet job ads failed to draw any reaction from the market. There are no key local drivers until Thursday when labour force data is released. In the meantime, traders are keeping a close eye on the outcome of the Reserve Bank of Australia board meeting on Tuesday. The majority of analysts polled by last week expect the RBA to keep the cash rate unchanged at 4.75 percent, giving a median 25 percent chance of a rate cut. "If they do cut rates, it'll be a surprise and clearly a negative for the Aussie. Totally nothing is priced in," Gibbs said.

© 1999-2022 Forex EuroClub
All rights reserved