Dollar lower as traders await stimulus hints

THE Australian dollar has fallen to its lowest level in a month as investors wait for clues to the timing of economic stimulus measures in the US and Europe.

Australian dollar

THE Australian dollar has fallen to its lowest level in a month as investors wait for clues to the timing of economic stimulus measures in the US and Europe.

At 12.00 AEST on Monday, the local unit was trading at 103.90 US cents, down from 104.16 cents on Friday.

On Monday morning, it fell to 103.72 US cents its lowest level since July 26.

The Australian dollar fell to a six-week low against the euro, dropping as low as 83.01 euro cents on Monday.
CMC foreign exchange dealer Tim Waterer said there are no major drivers for the Australian currency until late in the week.

He said traders are playing it safe ahead of the summit of central bankers from across the globe at Jackson Hole, Wyoming, where US Federal Reserve Chairman Ben Bernanke will make the keynote address.

"It seems as though investors are trading in a rather tepid fashion at the moment as we await the big event of the week," Mr Waterer said.

"So it's not entirely surprising to see some weakness in your high risk currencies in the lead-up to the events later in the week."

Mr Waterer said movements in Australian dollar this week will be dependant on how the market interprets stimulus situation in Europe and the US.

"Any comments by the central bank leader will have a big say on whether the Australian dollar can get back towards 105 US cents or whether we'll drift to 103 US cents," he said.

"I think it will only have a more significant move to the downside if (Dr) Bernanke disappoints later on in the week or if equities sell off for some reason.

"It could trade in that 103.50 US cents to 104.50 US cents in the lead-up to the summit, but it all depends on how equities go."

Markets in the UK will be closed on Monday night, Australian time, for the summer bank holiday.

At 12.00 AEST on Monday, the September 10-year bond futures contract was trading at 96.835 (implying a yield of 3.165 per cent), down from 96.845 (3.155 per cent) on Friday.

The September three-year bond futures contract was at 97.330 (2.670 per cent), down from 97.360 (2.640 per cent).