Dollar gives back early gains

The Aussie’s pullback comes amid US dollar support and end-of-year positioning.

The Australian dollar gave back early gains on Thursday to edge down in early evening trade.

The pullback came as the US dollar found support amid ebbing concerns around Brexit. End-of-financial-year positioning also pulled the currency lower, traders said.

At 5.45pm (AEST), the Australian dollar was trading at US74.23 cents, compared with US74.51 late Wednesday. It traded as high as US74.72.

The US dollar was moderately higher against its rival currencies as investors’ worries about the immediate effects of the UK vote to leave the European Union eased.

The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.10 per cent at 86.77. The US dollar was changing hands at Y102.77 midday local time in Tokyo, compared with Y102.80 late on Wednesday in New York.

The UK’s Conservative Party has said it intends to announce a new prime minister on September 9 to succeed David Cameron, who said last Friday that he would step down in the wake of his failed bid to persuade Britons to vote to remain in the EU.

But underpinning the broad support of the Australian dollar over the week have been solid equity markets and commodity prices, said Joe Capurso, currency strategist at CBA.

ANZ said that “Brexit continues to dominate the news but no longer the price action.” The fact that UK’s FTSE 100 equity index has regained its pre-Brexit-vote highs is remarkable in the face of widespread expectations that the nation was heading into recession, it added.

“It seems unlikely Brexit will be averted; markets are just moving on. The fallout for the UK economy will be very real, but relatively slow-moving,” ANZ said.

Stocks across Asia rose on Thursday. Japan’s Nikkei Stock Average was up 0.8 per cent, the local S&P/ASX 200 gained 1.8 per cent, and Korea’s Kospi rose 0.5 per cent. Hong Kong’s Hang Seng Index rose 1.8 per cent. China’s Shanghai Composite Index was about flat.

- Dow Jones newswires