Australian dollar weakens as greenback buoyed

The Australian was lower today in local trading against a US dollar that was stronger against all G-10 currencies.

The Australian was lower today in local trading against a US dollar that was stronger against all G-10 currencies.

Growing optimism that Greece will broker a deal to keep it in the eurozone supported equity and currency markets broadly.

Greece’s creditors suggested for the first time overnight that a deal to avert the country’s bankruptcy was in sight after an 11th-hour proposal submitted by Athens made a significant concession on pension cuts.

With fear abating in Europe, some traders said the path to an increase in US interest rates was clearing.

“Perhaps US dollar demand is coming from the view that the apparent agreement on Greece removes one potential barrier to a September Fed rate hike,” said Sean Callow, currency strategist at Westpac.

Meanwhile, data from China, Australia’s biggest trading partner was mixed.

The preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, rose to 49.6 in June from a final reading of 49.2 in May.

ANZ economist Zhou Hao said economic growth momentum in China was still on the weak side and the market was not very confident about the prospects for the economy.

The sluggishness of China’s manufacturing sector would put pressure on job creation, he added.

“This is the fourth consecutive update that indicates a contraction in the factory sector that is responsible for so much demand for Aussie raw materials,” said John Kicklighter, chief currency strategist at FXCM.

At 5:07pm the Australian dollar was trading at US77.37c compared with US77.89c late yesterday.