Australia dollar weakens as profit-takers sell currency

THE Australian dollar is weaker as a free trade deal with China encourages profit taking.

THE Australian dollar is weaker as a free trade deal with China encourages profit taking.

At 0700 AEDT on Tuesday, the local currency was trading at 87.09 US cents, down from 87.86 cents on Monday.

The formalisation of a free-trade deal with China gave profit-takers an excuse to sell the unit as it touched 88 US cents, BK Asset Management’s managing director of foreign exchange strategy Boris Schlossberg said.

“There is nothing really, fundamentally, that damaged the Australian dollar as far as trade goes,” he said from New York. “Most of the factors of today’s selling have to do much more with technical levels.” Traders are also cautious ahead of the Reserve Bank of Australia releasing the minutes of its November meeting, he added.

The Australian dollar lost some momentum after European Central Bank President Mario Draghi told European Parliament lawmakers the bank was ready to buy government bonds if inflation in the 18-country eurozone failed to rise, as anticipated.

Originally published as Australia dollar weakens as profit-takers sell currency