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$A lower on Greek and US concerns

Reported by AAP
Wednesday, November 28, 2012
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The Australian dollar is lower after trading in a tight range on concerns about Greece's bailout deal and the US fiscal cliff.

At 1700 AEDT on Wednesday, the Australian dollar was trading at 104.48 US cents, down from 104.80 US cents on Tuesday.

From 0700 AEDT, the local currency traded between 104.33 US cents and 104.58 cents.

National Australia Bank co-head of foreign exchange strategy Ray Attrill said this week's news of a Greek bailout deal was not enough to keep the Aussie dollar in a strong position overnight.

"There is still some conditionality associated with the deal," he said.

"The IMF (International Monetary Fund) has said they want to see the bond buyback completed before they will honour their commitment to a second (bailout) package."

European finance ministers announced on Tuesday that they had brokered a deal allowing Greece access to up to 440 billion euros ($A549.55 billion) in bailout funding.

Mr Attrill said fears that US leaders would fail to deal with the fiscal cliff had also kept the local currency low.

Overnight, US Senate majority leader Harry Reid expressed concern over the slow progress in sorting out the fiscal cliff - a series of tax rises and spending cuts due to start automatically in early 2013.

Australian capital expenditure data on Thursday and a central bank rates decision next week would be the next focal points for market, Mr Attrill said.

At 1700 AEDT on Wednesday, the Australian dollar was at 85.49 Japanese yen, down from 86.22 yen on Tuesday and at 80.83 euro cents, up from 80.70 cents at Monday's close.

Meanwhile, Australian bond futures prices rose strongly.

At 1630 AEDT on Wednesday, the December 10-year bond futures contract was at 96.865 (implying a yield of 3.135 per cent), up from 96.785 (3.215 per cent), on Tuesday.

The December three-year bond futures contract was trading at 97.330 (2.670 per cent), up from 97.270 (2.730 per cent).

Nomura rates strategist Martin Whetton said there was no specific data or international news driving prices higher.

"I just think we reached a trading level that was sufficiently low, and now the market wants to turn it around," he said.

He added that capex data and RBA decision would dominate markets later in the week.

"If the capex number suggests that there is no slowing down in expenditure, then everyone's who's thinking the RBA will cut next week will probably pare those expectations back," he said.

At its previous meeting on November 6, the RBA left the cash rate on-hold at 3.25 per cent.

21/10/2014 16:23Sydney, Australia. 21 October,2014
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