25/08/2011 - 06:52

$A a touch lower ahead of Bernanke speech

25/08/2011 - 06:52


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$A a touch lower ahead of Bernanke speech

The Australian dollar was mostly flat after better than expected US data overnight and as speculation eased that the US central bank will launch a third round of economic stimulus.

At 0700 (AEST), the Australian dollar was trading at 104.76 US cents, little changed from 104.80 cents yesterday.

Data out overnight showed US durable goods orders in July rose four per cent,much better than the 2.4 percent increase economists had expected.

Market sentiment this week has been driven by expectations that US Federal Reserve chairman Ben Bernanke will say a third round of economic stimulus, or quantitative easing (QE), will be needed to help the struggling American economy.

Mr Bernanke will address a symposium of global central banks in Jackson Hole, Wyoming, on Friday night, Australian time.

Bank of New Zealand currency strategist Mike Burrowes said these two factors had caused the Australian dollar to end the overnight session mostly flat.

"On the one hand you had some positive US data which would support risk sentiment, which would normally push the Aussie dollar higher," he said from Wellington.

"On the other side of that you had the market playing down expectations about what Bernanke would say."

Mr Burrowes said markets had risen on increased risk sentiment on expectations that Dr Bernanke would say the Fed would start a third round of quantitative easing.

"Overnight the market pulled back those expectations a little bit, they are probably now expecting him to outline the potential policy options the Fed could undertake."

On Friday, Reserve Bank of Australia (RBA) governor Glenn Stevens will appear before the House of Representatives Standing Committee on Economics.

"Our expectations for now is that he won't say anything too dramatic," he said.

Mr Burrowes said he expected the Australian dollar to trade in a range between 104.50 US cents and 105.00 cent on Thursday.

Since 1700 AEST on Wednesday, the local unit traded between 104.47 US cents and 105.23 cents.


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