A$ dips as risk averse investors sell
- — 16 March, 2010 09:46
SYDNEY - 16/03/2010 07:52:05 AM [AAP] The Australian dollar opened a touch lower as risk averse investors sold off the local currency over credit ratings fears for the UK and the US.
At 0700 AEDT, the Australian dollar was at $US0.9141/43, down 0.02 per cent from Monday's close of $US0.9143/45.
Since 0700 AEDT, the local unit traded in a narrow range between $US0.9096 and $US0.9162.
Commonwealth Bank chief vice president of institutional banking and markets Tim Kelleher said the Australian dollar sold off after credit ratings agency Moody's said debt affordability is "most stretched" in the US and Britain among countries with the top "AAA" rating.
A drop in the credit rating could make it more expensive for the government to borrow money.
But then the currency had snuck back up after the sell off as US stocks reversed earlier losses to move into positive territory near the end of the offshore trading session.
"Overall the Australian dollar sold off overnight from those Moody's comments yesterday about the UK and the US mainly," Mr Kelleher said from Auckland.
"There was some risk off trade on the back of it."
Stocks staged a late recovery on Monday after initially falling on concerns about China's economy and the warning from Moody's about the US.
Mr Kelleher said the Australian dollar had been on the back foot since nudging the US$0.9200 mark on Monday afternoon.
The Reserve Bank of Australia (RBA) publishes minutes of its March 2 monetary policy meeting at 1130 on Tuesday.
"It's been pretty quiet but there are still some worries around about Greece," Mr Kelleher said.
He predicted the local unit would trade between $US0.9110 and $US0.9160 during the domestic session.
