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$A down on euro zone weakness

Reported by AAP
Wednesday, April 11, 2012
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The Australian dollar has fallen on weakened euro zone markets.

CMC Markets chief market strategist Michael McCarthy said the local currency had been pushed down by moves in Europe, and as the US dollar regained some strength.

"There's a clear downtrend in risk assets going on at the moment, and the Aussie dollar is caught up in that," he said.

"We are expecting further weakness - that is further US dollar strength.

"Anytime the market gets a whiff that US data is softer than expected we will see the Aussie strengthen again."

Mr McCarthy said overnight concerns about Spanish debt were not necessarily the cause of the weakness in European markets.

"I'd suggest that the explanation for last night's market behavior is a bit after the fact," he said.

"Spanish bond yields rose, the market fell and the two were tied together in a causal relationship.

"The possibility of a Spanish default is no nearer or further away than it was four days ago."

At 1200 AEST on Wednesday, the Australian dollar was trading at 102.59 US cents, down from 103.03 cents on Tuesday afternoon.

From 0700 AEST, the local currency has traded between 102.26 US cents, and 102.65 cents.

Meanwhile, Australian bond future prices were higher on Wednesday.

At 1200 AEST on Wednesday, the June 10-year bond futures contract was trading at 96.200 (implying a yield of 3.800 per cent), up from Tuesday's close of 96.170 (3.830 per cent).

The June three-year bond futures contract was at 96.790 (3.210), up from 96.760 (3.240 per cent).

02/09/2014 16:38Sydney, Australia. 2 September,2014
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