The Australian dollar fell today as concerns about rate hikes in China and sovereign debt issues in Europe weighed on investor sentiment to risk.
At the close of local trade, the dollar was buying 97.69 US cents, down 0.9 per cent from Tuesday’s close at 98.55 cents.
Commonwealth Bank currency strategist Joseph Capurso said the currency moved in a narrow range during the local session following a sell-off of risk assets overnight.
‘‘It has not moved around too much today,’’ Mr Capurso said. ‘‘It has been pretty quiet after the big ructions (overnight).’’
Wall Street and European stocks fell sharply overnight on growing unease over Europe’s massive sovereign debt and China’s efforts to tackle rising inflation.
‘‘These concerns about China tightening monetary policy have seen all the commodity currencies hit, and the Aussie (dollar) is a part of that,’’ Mr Capurso said. ‘‘Also the ongoing problems with Ireland have seen all currencies sell off against the US dollar, with the Aussie has been part of that sell-off as well.’’
During Tuesday’s New York session, the Australian dollar fell to 97.25 US cents, its lowest level since October 29.
Economic events due in the US during Wednesday’s offshore session include the consumer price index (CPI), housing and building starts, all for October.
Financial markets forecast US CPI to have risen by 0.3 per cent from September to October, from 0.1 per cent in the month before.
Mr Capurso said a smaller than expected rise in US CPI could provide some support for the Australian dollar.
‘‘That could set off a sell (the) US dollar story, with quantitative easing might be bigger than what the Fed has said recently,’’ he said. ‘‘It might be a bit of a reprieve for the Aussie overnight if the CPI is weaker.’’
Mr Capurso forecast the Australian dollar to trade between 97.20 US cents and 98.50 US cents during Wednesday’s offshore session (AEDT).
AAP