Mixed trading for the Australian dollar

The Australian dollar opened this morning trading at 0.7593 after reaching 0.7601 overnight. Yesterday the Aussie firmed against the greenback managing to close the day near 76 cents. It quickly fell to 0.7565 before recovering in the New York session.

The recovery was broadly led by US dollar weakness rather than AUD strength. US Non Farm payroll figures are due out tonight. The market downgraded its expectations yesterday, selling the greenback in response.

The local unit traded softer against the euro as the worlds second most traded currency continued to strengthen. The AUD/EUR has lost more than a cent and a half in the past 48 hours.

The European Central Bank (ECB) announced that official interest rates in Europe would remain at 2.00%. They have kept this level since June 2003. Comments following the announcement pointed towards an interest rate hike towards the end of 2005. These comments mixed with a more upbeat view of the economy and a likely resolution to the German electoral stalemate has helped the EUR outperform most of the major currencies this week.

The euro has also seen the benefit of uncertainty in the US. Inflationary fears from escalating oil prices, combined with falling equity markets has seen a huge shift in funds from the US to Europe.

Australian dollar trading is likely to once again take a back seat to overnight events in Europe and the US.