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 The Aussie dollar rose 1.5 percent to its highest in a fortnight
after the Reserve Bank dropped a long-used reference in its
post-policy-meeting statement to a further decline of the currency
being necessary.
The New Zealand dollar, which often tracks the Aussie, gained more
than half a percent, while the Canadian dollar, helped by a 1.5
percent rise of prices for Brent and U.S. crude , clawed its way
back from an 11-year low of almost C$1.32.
The dollar, euro and yen were all holding in recent ranges, with the
dollar 0.2 percent lower against the euro at $1.0977 and a basket of
currencies on the day.
"It's all been about the commodities units again this morning," said
a dealer with an international bank in London. "There's been some
recovery but I wouldn't hold my breath, the outlook for them all
still looks weak."
Oil sinking below $50 a barrel, allied to stock market turmoil in
China and continuing broader risks to world growth, all make for a
nervy backdrop to an interest rate move by the U.S. Federal Reserve
later this year.
After seven years of zero or virtually zero official borrowing costs
in the world's main currency, a Fed hike will be a shock for many
economies, particularly in the developing world. Concern about how
that affects Chinese companies that have borrowed heavily in dollars
has weighed on commodities prices and in turn on developed currency
markets, on the Aussie, kiwi, Canadian dollar and Norwegian crown.
"I wouldn't rush out to declare the four-year downtrend in the
Aussie against the dollar over, but it's not the most attractive
short looking forwards," said Kit Juckes, a strategist with Societe
Generale in London.
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"Since the Aussie peaked in July 2011, as well as falling by a third
against the dollar, it has fallen by 12 percent against the kiwi for
example, and AUD/NZD has a lot of upside as a result now relative
rates are moving in the Aussie's favor."
By GMT 1052 (0652 EDT), the Aussie was seeing another attempt to
rise above $0.74, up 1.5 percent on the day and recovering from a
six-year trough of $0.7234 set last week.
The Canadian dollar last traded at C$1.3118 per U.S. dollar,
recovering from C$1.3176 - its lowest since August 2004.
"The longer that crude takes to recover, the greater the risk to
energy capex plans for 2016 which in turn feeds into the Bank of
Canada's projections and lowers the hurdle for further easing down
the line," said Elsa Lignos, senior currency strategist at RBC
Capital Markets.
"Next resistance targets for USD/CAD are 1.3246 and 1.3383 though it
will take ongoing crude weakness to maintain the USD/CAD rally."
(editing by John Stonestreet)
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