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Aust dollar closes flat

Reported by AAP
Monday, March 18, 2013
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The Australian dollar has closed flat, with the currency finding support despite fresh jitters from Europe stemming from a proposed Cyprus deposit levy.

The local currency ended the domestic trading day at 103.60 US cents on Monday, little changed from Friday's close of 103.69 US cents.

The Australian dollar dipped to a low of 103.34 US cents during weekend trading in response to some subdued US consumer confidence figures and news that Cyprus planned to slap a levy, of as much as 10 per cent, on all bank deposits.

However, the Australian dollar pared back those offshore losses to open the local trading day at 0700 AEDT at 103.58 US cents and managed to trade within a narrow range for most of Monday's session.

The levy, yet to be voted upon by the Cypriot parliament, was part of a bailout package with the European Union.

Rochford Capital director of market risk Derek Mumford said the Australian dollar's performance on Monday followed the trend of recent months where it behaved more like a safe-haven currency.

"I am not too bearish on the Aussie," Mr Mumford said.

"In comparison, our economy, our political situation and our banking system is in good shape.

"At the moment, I can't see any real reason for outright selling of the Aussie, it may just hold in a very tight range around about where it is now."

While the Australian dollar was flat against the US dollar, it rose strongly against the euro.

At 1700 AEDT, the currency was at 80.34 euro cents, up from Friday's local close of 79.65 euro cents.

"It is certainly very bad for the euro," Mr Mumford said of the Cyprus deposit levy.

"I think it sets a very bad precedent."

The full impact of the Cyprus savings levy proposal would be known once European markets opened after the weekend, with trading conditions expected to be volatile.

The Australian dollar was at 97.85 Japanese yen, down from 99.70 yen previously.

Meanwhile, the domestic bond market finished firmer.

The June 10-year bond futures contract ended Monday's local session at 96.510 (implying a yield of 3.490 per cent), up from Friday's close of 96.345 (3.655 per cent).

The June three-year bond futures contract was at 97.060 (2.940 per cent), up from 96.880 (3.120 per cent) previously.

Nomura head of of fixed income Jon Linton said the event in Cyprus made many investors very nervous, causing a return to fixed-income assets such as bonds.

"It has the potential to really change what is going on in Europe and put a real spanner in the works of the risk-on rally we have had," Mr Linton said.

22/12/2014 03:32Sydney, Australia. 22 December,2014
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