The Australian dollar fell on Monday after strong demand for Japanese yen and New Zealand dollars depressed the local currency.
At the local close, the dollar was trading at $US0.8643, down from Friday’s close of $US0.8693.During the day, the local unit moved between a high of $US0.8699 and a low of $US0.8585, reached in afternoon trade.
The Australian dollar was under pressure for most of the Asian trading day after investors pushed the Japanese yen to an eight-month high against the US dollar.
A senior currency analyst at financial markets research group Forecast, Lee Wai Tuck, said the Japanese currency found support after some comments from newly installed Finance Minister Hirohisa Fujii suggested he supported a stronger yen.
‘‘That actually triggered a lot of selling of Aussie against the yen,’’ Mr Lee said from Singapore. ‘‘That’s why the Aussie came down all the way to $US0.8585.’’
Mr Lee said a stronger New Zealand dollar, which hit a near eight-month high against the Australian dollar on Monday, also played a part in the local currency’s weakness.Weaker local and regional equity markets also weighed on the Australian dollar on Monday, Mr Lee said.
The yen pared back those gains after the Mr Fujii clarified his comments at a forum in Japan, denying the government would not intervene in currency markets to counteract a stronger yen.
His comments helped lift the Australian dollar back above $US0.8600.Mr Lee said there was a mixed reaction to Reserve Bank of Australia (RBA) governor Glenn Stevens testimony before a parliamentary committee in Sydney on Monday.
‘‘Some people read it as quite hawkish because it says rates will have to rise at some time,’’ Mr Lee said. ‘‘But there are some people who said that when they read the full text, he was not as hawkish as what the headlines were saying.’’
Mr Stevens told the committee that ‘‘in due course, both fiscal and monetary support will need to be unwound as private demand increases’’.
Mr Lee said he expected US equity markets, which have suffered losses for past three trading sessions, to provide the bulk of direction for Australian dollar trading during the offshore session.
‘‘There’s likely to be some pressure as market players are still looking to sell on rallies,’’ Mr Lee said.‘‘The risks could be on the downside.’’
AAP
