SYDNEY (Thomson Financial) - The US dollar was little changed against major currencies in Tuesday afternoon trading in Asia as
traders await fresh leads.
The release of US pending home sales and factory orders data for May later Tuesday are the next
focus for market participants who will also be wary of declining US bond yields of late which are
weighing on the greenback.
Traders will also be unwilling to push currency pairs too far ahead of the US Independence Day break on Wednesday.
At 2.31 pm (0431 GMT) the US dollar was steady at 122.37 yen from 122.38 yen in Asian morning
trade while one euro was buying 1.3620 dollars versus 1.3623 dollars earlier.
Falling US bond yields, as well as higher metals prices, helped the Australian dollar hit a fresh 18-year high of 0.8598 US dollar in overnight trade and also rose against most other major currencies.
The Australian dollar failed to rise against the New Zealand dollar which itself struck a new 25-year high of 0.7836 US dollar.
NAB Capital strategists said with the external backdrop for the Australian dollar having improved significantly over the past week -- greater risk-appetite and commodity prices --- many traders will be eyeing an eventual rise in the currency to the post-float high of 0.8950 US dollar reached in February 1989.
Commonwealth Bank economist Michael Workman said they have lifted their forecasts for the Australian unit, now expecting the currency to peak at 0.8900 US dollar at the end of calendar 2007 and then remain supported above 0.8000 US dollar throughout 2008.
They said the upgrade is due to the delay in the start of US dollar strength until early, while rising interest rate differentials and strong mineral commodity prices will prevail into 2008.
"We also expect the spread between Australian and US interest rates to widen in coming months. We expect a Reserve Bank of Australia interest rate rise in August," Workman said.
Sydney 2.31 pm (0431 GMT) vs Sydney 10.14 am (0014 GMT)
US dollar
122.37 yen vs 122.38 yen
1.2113 sfr vs 1.2106 sfr
Euro
1.3620 usd vs 1.3623 usd
166.65 yen vs 166.69 yen
1.6495 sfr vs 1.6489 sfr
0.6752 stg vs 0.6757 stg
Sterling
2.0171 usd vs 2.0168 usd
246.73 yen vs 246.78 yen
2.4429 sfr vs 2.4411 sfr
Australian dollar
0.8564 usd vs 0.8586 usd
0.4246 stg vs 0.4257 stg
104.80 yen vs 105.04 yen
New Zealand dollar
0.7811 usd vs 0.7808 usd
paul.daniel@thomson.com
pd/ms
