(Australian Associated Press)
The Australian dollar continues to slide against its US counterpart as risk sentiment sours due to a report the European Central Bank will taper its bond buying program.
At 1200 AEDT on Wednesday, the local unit was trading at 76.22 US cents, down from 76.74 US cents on Tuesday.
News that the ECB has almost reached consensus on a taper for its bond buying program is another sign the landscape of global central banking is shifting, AxiTrader chief market strategist Greg McKenna said.
“This is an important signal that paradigm of ever decreasing long bond rates being bid lower by central bank demand is nearing its end,” he said.
It has the potential to be very influential on the Aussie dollar, which has been a significant beneficiary of investors buying Australian government and other bonds in the search for yield, he said.
“If Australia has been a safe harbour in that world of negative rates, then as demand for the Aussie wanes so the upward momentum we have seen this year in the Aussie dollar will slow,” Mr McKenna said.
A better than expected rise of 0.4 per cent in August retail spending failed to ease the pressure on the local currency.
CURRENCY SNAPSHOT AT 1200 AEDT ON WEDNESDAY
One Australian dollar buys:
* 76.22 US cents, from 76.74 cents on Tuesday
* 78.34 Japanese yen, from 78.45 yen
* 67.99 euro cents, from 68.57 euro cents
* 59.88 British pence, from 59.76 British pence
* 106.08 New Zealand cents, from 105.25 NZ cents
* CGS 5.25pct March 2019, 1.624pct, up from 1.586pct on Tuesday
* CGS 4.25pct April 2026, 2.075pct, up from 2.02pct
Sydney Futures Exchange prices:
* December 2016 10-year bond futures contract at 97.915 (implying a yield of 2.085 per cent), down from 97.970 (2.030 per cent) on Tuesday.
* December 2016 3-year bond futures contract at 98.43 (1.57 per cent), down from 98.48 (1.52 per cent).
(*Currency closes taken at 1700 AEST previous local session, bond market closes taken at 1630 AEST previous local session)