Dollar opens lower as commodities fall
12-November-08 by AAP
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The Australian dollar has opened lower, in line with weak equity markets and falling commodity prices overnight.
At 0700 AEDT, the Australian dollar was trading at $US0.6583/88, down 1.31 US cents, or 1.95 per cent, from yesterday's close of $US0.6715/18.
During the overnight session, the unit traded between a low of $US0.6479 and a high of $US0.6722.
The Australian dollar briefly slipped below $US0.6500 - the bottom of its recent trading range - overnight as US equity markets slumped on weak company results and further concerns about embattled car maker General Motors (GM).
GM shares fell a further 15 per cent to a 65-year low after the company said it would lay off a further 1900 workers and speculation it could run out of cash by the end of the year.
Also hurting the Australian dollar were lower commodity prices - the front-month crude oil contract dropped below $US59 a barrel for the first time since March 2007 during trade on the New York Mercantile Exchange.
The price of gold, copper and silver also fell.
ANZ senior dealer Alex Sinton said the local currency was taking direction from the performance of US equity markets.
"Like the Kiwi and the Dow, the two are trading fairly closely at the moment," Mr Sinton said from Auckland.
The Australian dollar picked up 1.2 US cents between 0530 AEDT and 0630 AEDT to reach $US0.6644, but the rally quickly faded, with the unit dropping back below $US0.6600.
The Australian Bureau of Statistics publishes the labour price index for the September quarter at 1130 AEDT.
The Westpac-Melbourne Institute Index of Consumer Sentiment for November also will be released today.
In Canberra, Treasury secretary Ken Henry addresses the National Press Club at 1230 AEDT.
Mr Sinton said the Australian dollar would be under pressure today if Asian equity markets followed a weak finish on Wall Street.
"It still looks vulnerable on the down side," Mr Sinton said.
"If Asia is fairly risk averse on things, and the way equity markets have performed overnight there's no reason to believe they won't be, another test of the downside is pretty much sure to occur."
At 0900 AEDT, the Reserve Bank of Australia's trade weighted index (TWI) was at 54.4, down from yesterday's close of 55.4.
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