Australian dollar weakens as greenback increases, euro declines

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PERTH: Australian dollar weakened on the first trading day of 2015 while greenback increased power from a declining euro.
At 1700 AEDT on Friday, the Australian dollar was trading at 81.37 US cents, down from 81.93 cents on New Year’s Eve.
The local currency dropped from 81.72 US cents, minutes before noon, to 81.31 cents within little more than half an hour.
National Australia Bank chief markets economist Ivan Colhoun said the Australian dollar fell as the euro hit its weakest point against the greenback since July 2012, which saw the US dollar rise against a series of currencies.
“It’s more … US dollar strength and euro weakness,” he said.
Traders overseas are also squaring up their positions on the greenback in anticipation of strong American economic data, and the prospect of a US interest rate rise in 2015.
“The view for the year is to be long US dollars,” Mr Colhoun said.
He predicted the Australian dollar could touch 78 US cents by the end of 2015, which would put the currency marginally above Reserve Bank governor Glenn Stevens’s wish for it to trade at 75 US cents.
“He’d be quite happy about that,” Mr Colhoun said.
At 1700 AEDT, the Australian dollar was at 98 Japanese yen, down from Wednesday’s close of 98.08 yen, and at 67.51 euro cents, up from 67.40 euro cents.
Meanwhile, the bond market weakened on as investors prepared for a strong set of US manufacturing numbers for December from the Institute for Supply Management.
At 1630 AEDT on Friday, the March 2015 10-year bond futures contract was trading at 97.175 (implying a yield of 2.825 per cent), down from 97.240 (2.760 per cent) on New Year’s Eve.
The March 2015 three-year bond futures contract was at 97.850 (2.150 per cent), down from 97.900 (2.100 per cent).