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Dollar falls back below US76c

The local unit has edged back after a choppy session, as investors look ahead to tomorrow’s jobs data.

The Australian dollar fallen back below US76 cents after hitting its highest levels since May 3 overnight, as investors looked ahead to employment data on Thursday.

Still, traders said the general strength of the Aussie reflected rising risk sentiment as concerns around the UK’s vote to leave the European Union subside for now, and more talk circulates of central bank stimulus to lift growth in major economies.

At 5.30pm (AEST), the Australian dollar was trading at US75.94 cents, compared with US76.24 late on Tuesday. Overnight, the currency traded at a high of US76.56.

“Looking across market-pricing action, it is very similar to yesterday’s and the day before that, with risk clearly trading strongly,” said Martin Whetton, interest-rate strategist at ANZ.

Mr Whetton said the improving mood in global markets could lead to changes in bets on the pace of interest-rate rises in the US.

“One has to wonder how senior members of the Fed are now feeling,” he added. “With the impact of Brexit looking minimal and payrolls rebounding back in June, is the Fed ready to put hikes back on the table?”

Mr Whetton said a rate increase by the Fed before the year-end looks likely.

Some of the Australian dollar’s retreat from its overnight highs was due to denials in Japan that Tokyo is set to announce a policy of so-called “helicopter money,” in which a central bank directly finances government spending.

Japan’s Chief Cabinet Secretary Yoshihide Suga on Wednesday denied a local media report that the government is mulling the possibility of implementing a helicopter money policy.

“There is no truth that the government is considering such a policy,” Mr Suga said at a new conference.

But he added that the government was planning to introduce “comprehensive and bold economic stimulus to secure the exit from deflation and to maximise the effects of zero-rate conditions.”

- Dow Jones newswires

James Glynn
James GlynnSenior Reporter, The Wall Street Journal

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Original URL: https://www.theaustralian.com.au/business/markets/dollar-falls-back-below-us76c/news-story/403bd83331bdabe0566c6100fa104512