Australian dollar drops versus U.S. counterpart

Posted On: January 04, 2013

The Aussie fell against the U.S. dollar during trading on Friday, as the currency was affected by drops to both domestic and Chinese service-industry indices, Bloomberg News reports.

Australian bonds dropped, pushing benchmark rates for 10-year yields to the highest level in more than four months. Demand for safe-haven purchases such as these bonds was curbed by gains in Asian stocks.

"The Aussie is looking a bit overvalued," Masashi Murata, a currency strategist in Tokyo at Brown Brothers Harriman & Co., told the news outlet. "The risk scenario for the Aussie is for the recovery in the Chinese economy to halt and Australia’s domestic demand to deteriorate."

The monetary unit had been a top performer against the U.S. dollar following the fiscal cliff deal in American legislature, delaying intervention measures from the Royal Bank of Australia.

However, action may be taken by the bank if a certain level is reached, according to FX Street.

"The preconditions for this are not yet there but a sustained period above 1.10 should it come might change things," Greg McKenna, founder at GlobalFX, told the news outlet. "For now then the market is free to push the Aussie Dollar where it will." 

Category: Industry News

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