
From Dow Jones (James Glynn)
The Aussie is testing technical support around US$0.9850--a significant signpost for the unit in recent years, traders said.
'This level is something in the back of all traders' minds and holds a historical significance,' Easy Forex head of foreign exchange markets for Asia-Pacific Francisco Solar said.
Over the past two weeks the Australian dollar has fallen about 5% against the U.S. dollar. Late on Thursday it was at US$0.9877--having been as low as US$0.9855 late on Wednesday.
The Australian dollar won't fall below this critical support, ANZ Bank head of global markets research Richard Yetsenga said. Recent selling is linked to speculation the
Concerns about
The US$0.9850 milestone was the peak in the Australian dollar's rally in 2008 before the unit collapsed 40% after the demise of Lehman Brothers and a world-wide financial crisis. It was a hurdle as the Australian recovered before finally breaking above parity with the U.S. dollar in late 2010. The Australian dollar fell below US$0.9850 and all the way to US$0.9700 a year ago during the European sovereign debt crisis.
'Ultimately the combination of subtrend economic growth, lower short-term interest rates, a sustained fall in the terms of trade as global iron-ore and coal prices adjust to rising supply and the reversal of unhedged capital flows leave the Australian dollar scope to 'catch down,'' it said this week in a client note.
Write to James Glynn at james.glynn@wsj.com
(END) Dow Jones Newswires
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