Dollar lifts closer to US75c

Sentiment remained cautious in late afternoon, amid soft commodity prices.

Stacks of Australian one dollar coins. Focus on front coin.

The Australian dollar lifted closer to US75 cents in late trade, despite the global “risk-off” shift that emerged overnight leading to weaker commodity prices.

At 5pm (AEST), the Australian dollar was trading at US74.90c, up from US74.64 at the same time on Tuesday.

Sue Trinh, a currency strategist at RBC Capital markets said liquidity injections by the People’s Bank of China ahead of a coming week-long national holiday might have weighed on market sentiment.

“If the lead-up to the week-long Lunar New Year in February is any guide, a renewed boost in Chinese liquidity injections to avoid a cash crunch onshore is only just starting,” she said.

Jitters ahead of a policy meeting of the US Federal Reserve and weakness in oil prices also contributed to the ongoing cautious mood in markets.

Overnight US crude oil dropped 1.8 per cent to $US45.46 a barrel after the International Energy Agency slashed its forecast for global oil demand this year amid a “wobbling” Asian demand.

Locally, consumer confidence showed some resilience in September, stoking expectations that robust consumer demand will continue to support economic growth.

The Westpac-Melbourne Institute Index of Australian Consumer Sentiment increased by 0.3 per cent in September from to 101.4 in August.

Westpac’s chief economist, Bill Evans, said confidence levels are stable and above average.

“This stability over the last six months has been despite significant events that can usually be expected to impact confidence: two interest rate cuts from the Reserve Bank and associated reductions in mortgage rates; a Commonwealth Budget; a Federal election; and some major developments offshore such as the surprise UK referendum result and the build-up leading into November’s US election,” he said.

Dow Jones