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AUSTRALIAN DOLLAR GAINS DESPITE ECONOMIC SLOWDOWN

Posted by Gilmour Poincaree on December 3, 2008

December 03, 2008

Article from: Australian Associated Press

PUBLISHED BY ‘THE AUSTRALIAN’

THE Australian dollar was higher at noon after a positive finish on Wall Street improved risk sentiment, and despite figures THE AUSSIE DOLLAR - AUD - AUSTRALIAN DOLLAR which showed the economy had grown at the slowest pace in eight years.

At 12noon (AEDT), the Australian dollar was trading at $US0.6416/20, up from yesterday’s close of $US0.6357/60.

During the morning, the local unit traded between a low of $US0.6389 and a high of $US0.6456.

The Australian dollar rose strongly after opening the local session at $US0.6393/97 at 7am AEDT, climbing above $US0.6400 in line with a rally on Wall Street.

The Dow Jones Industrial Average gained 3.31 per cent, the S&P500 index advanced 3.99 per cent and the Nasdaw ended the New York session up 3.70 per cent.

A positive start on local stock markets helped the unit hold above $US0.6400.

The currency was little changed after the latest gross domestic product figures showed the Australian economy grew by 0.1 per cent in the September quarter, for an annual pace of 1.9 per cent.

Easy Forex senior dealer Francisco Solar said the Australian dollar “held up quite well” to the news the economy grew at its slowest pace in eight years.

“If you look at the expectations, they were expecting a number less than the previous quarter and that’s exactly what came in,” Mr Solar said.

“A lot of the doom and gloom, the acceleration in the financial calamity that we’ve seen of late has been in the last part of that quarter into where we are now.”

Mr Solar said although economic data continued to point to a weakening global economy, market sentiment rather than fundamentals was providing direction for currency markets.

“Had this occurred maybe last year, the Aussie would have actually plummeted quite substantially,” Mr Solar said.

“It just goes to show how the markets are really looking for a change in sentiment to drive markets further.”

CLICK HERE FOR THE ORIGINAL ARTICLE

PUBLISHED BY ‘THE AUSTRALIAN’ (Hong Kong – China)

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