Nervous market weakens dollar at noon
August 22, 2007
Following the nervousness in the currency market, dollar was weak at noon and it sustained the fall amid the jumpy status of currency market.
At noon, Australian dollar observed a down fall at $US0.7979/82, which is less than last close of $US0.8018/23. The morning trade opening was noted amid a high of $US0.8022 and a low of 0.7972, hardly altering from where it closed yesterday.
Joshua Williamson, senior currency strategist of TD securities, blamed the Australian dollar for lacking direction which kept market partakers waiting for situation of global credit markets, as he quoted â€œThere seems to be nervousness in currency marketâ€.
He also, quoted â€œThere is no particular reason for lagging of Australian dollar below $US0.8000â€.
Mr. Williams added that there was definitely a lack of direction in the market today, thus chances of Australian dollar trade in afternoon is firmed to stay between $US0.7980 and 0.8020.
Reports are that last night there was a meeting between Chris Dodd, chairman of US Senate Banking Committee, Ben Bernanke, chairman US Federal Reserve and Henry Paulson, treasury secretary. The meeting resulted in the discussion of current nervousness and turbulence of currency in financial market, amid repercussion on US economy.
The meeting among the higher officials held last night had not much of an effect on the afternoon fall of currency.
Senator Dodd quoted â€œMy stand was on the use of effective ideas and devices available, as I requested Mr. Chairman to imply necessary means to support the flow in the market. And Mr. Chairman has been positive in his assuranceâ€
Even the sudden rise in the prices of US treasury following the increasing prospects of US rate cut, could not stop the falling of Australian dollar market in the afternoon from $0.8020 to $US0.7980.
Experts believe that the abrupt nervousness and lack of direction in the market liquidity is connected to talks going on the rate cut by Federal Reserve (Fed).
Following the current scenario of currency market and the dip in dollar this afternoon, more meetings are likely to commence between the higher officials.
Afternoon also witnessed rise in Commonwealth Government February 2017 bond from 5.855 percent to 5.835 percent, where it was closed yesterday. Also no change was observed in the August bond yield as it was found to be stable at 6.110 percent.
While September 10-year bond futures contract suffered a downfall from yesterdayâ€™s closing, as it was noted 94.135 less than 94.160 where it closed yesterday. And the September 3 year contract was found to follow the dip from 93.915 to 93.890.
Reserve bank of Australia noted index (TWI) with a fall this afternoon. The index (TWI) closed yesterday at 65.0 and sustained a downfall to 64.6, at 12pm.