Australian dollar slides to four-year low against greenback

[November 26, 2014]  By Patrick Graham

LONDON (Reuters) - The Australian dollar hit a four-year low against its U.S. counterpart on Wednesday before data likely to prove crucial for several currencies against the greenback.

The euro, up almost a cent against the dollar this week, dipped after European Central Bank Vice President Vitor Constancio said the bank could gauge in the first quarter of 2015 whether it needed to buy government bonds.

The Aussie has been one of the biggest decliners during the dollar's rally since July, and Reserve Bank of Australia Deputy Governor Philip Lowe propelled it to its lowest since August 2010 on Tuesday by saying it was still overvalued.

Dealers said investors in Europe kept selling it in early trade, pushing it as low as $0.8499 and below support around 1.09 New Zealand dollars, above which it had held since August.
 

"The Aussie has been absolutely creamed over the past 24 hours ... there is talk out there of some fast (speculative) money guys betting against it," said Graham Davidson, a spot trader with NAB in London.

Several major banks say fair value for the Aussie would be around $0.84-0.85. Davidson said he would not want to bet on further weakness from here.

Traders said U.S. numbers on jobs, consumer sentiment and durable goods orders, due at 1330 GMT, would test a recovery for the euro after European Central Bank Governor Mario Draghi last week sank the currency to less than $1.24, its lowest in more than two years. Constancio's comments took the euro down 0.2 percent to $1.2454.

"My feeling is the market would like to sell this week's little rally, but for that to happen I think we would need to see some decent data out of the United States," HSBC strategist Daragh Maher said.

Analysts and traders Reuters spoke to were bearish about a breakdown of British third-quarter gross domestic product, but sterling <GBP=D4> <EURGBP=D4> was robust in morning trade, reflecting what many said was a choppy market lacking in direction.

RBC Capital Markets analysts said volumes were falling before the U.S. Thanksgiving holidays, starting Thursday, and some players may be squaring up after a fifth straight month of solid gains for the dollar.

Helping the dollar were 10-year U.S. Treasury note yields, up to 2.257 percent from around 2.245 in early trade in Europe.

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