25/09/2008 - 15:43

Aust dollar stronger after Bush speaks

25/09/2008 - 15:43

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The Australian dollar finished marginally firmer today after US President George W Bush's comments the US economy was "in danger" sparked a US currency sell-off.

Aust dollar stronger after Bush speaks

The Australian dollar finished marginally firmer today after US President George W Bush's comments the US economy was "in danger" sparked a US currency sell-off.

At 3pm WA time, the Australian dollar was trading at 83.92 US cents, up a touch from Wednesday's close of 83.85 cents.

The Australian dollar struggled for most of the morning, then surged to reach a lunchtime high of 84.20 US cents, following President Bush's televised address which said America's "entire economy is in danger".

"We are in the midst of a serious financial crisis," he said from the White House.

President Bush said the United States faced a "long and painful recession" unless Congress approved his $US700 billion ($A841.25 billion) rescue plan to buy bad mortgage assets.

"Without immediate action by Congress, America could slip into financial panic," he said.

The US dollar also weakened against the euro and the Japanese yen this morning to finish the Australian session weaker.

A senior currency analyst with financial markets research group Forecast, Lee Wai Tuck, said while Mr Bush's comments helped the Australian dollar, the local currency could come under pressure tomorrow if Congress delayed passing the financial markets salvage plan.

"There are serious consequences to the economy if the whole thing is delayed," Mr Lee said from Singapore this afternoon.

Congressional Democrats were hopeful a deal to bail out Wall Street was closer to being reached.

"I'm optimistic," Senate Banking Committee Chairman Christopher Dodd told reporters after Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson appeared before the House of Representatives Financial Services Committee for a second day.

"It is a sad and tragic moment for our country but it deserves a response," Senator Dodd said.

Mr Lee said the Australian dollar could fall back to 83 US cents tomorrow morning, below today's low of 83.28 US cents, if New Zealand gross domestic product (GDP) data for the June quarter showed a negative print.

The New Zealand economy contracted by 0.3 per cent in the March quarter, and another negative GDP result would signal a technical recession.

The Australian dollar finished at 88.65 Japanese yen, down from Wednesday's close of 89.11 yen, and at 56.87 euro cents, down from 57.09 euro cents.

The euro finished at 1.4757 US dollars, up from Wednesday's close of 1.4687, and at 155.90 Japanese yen, down from 156.08 yen.

The US dollar closed the local session at 105.65 yen, down from 106.28 yen.

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