Reuters Australia
Aussie dlr benefits from US$ woes, bonds becalmed
Friday July 11, 11:21 AM
SYDNEY, July 11 (Reuters) - The Australian dollar was holding firm on Friday, helped by a big rally in commodities, while the U.S. dollar was depressed by concerns over the health of the U.S. financial system.
* The local dollar was holding up at $0.9615, from $0.9602 late here on Thursday. It stretched as high as $0.9640 in offshore trade but traders reported considerable resistance ahead of its recent 25-year peak at $0.9667. * The Aussie has been trying to sustain a break above 96 U.S. cents since May with no luck and dealers are nervous about buying at these levels.
* Still, the U.S. dollar has plenty of troubles of its own. Concerns grow about the health of mortgage giants Fannie Mae and Freddie Mac [ID:nN10184180], whose shares tumbled for a second session on Thursday.
* Fannie and Freddie hold around half of all the mortgage debt in the United States, so their solvency is of paramount importance to the financial system.
* Many foreign central banks must also be nervous as they hold around $978 billion of agency debt. Were they to cut their holdings it could lead to large outflows from U.S. dollars. * Traders also reported recurring rumours that U.S. investment bank Lehman Brothers LEH.N was in trouble [ID:nN10337628].
* Despite the jitters, the Aussie still managed to edge up on low-yielding currencies like the yen and Swiss franc, suggesting investors were growing more confident in the carry trade.
* The Aussie firmed to 102.90 yen AUDJPY=R, and looked to test resistance around 103.10.
* Commodities were a help to the local currency with the CRB index .CRB jumping 2.07 percent to 458.92, led by oil, gold and industrial metals.
* Gold XAU= reached $945.45 an ounce while U.S. crude futures CLc1 were up at $141.73, from $136.00 on Thursday.
* Australian bond futures were little changed as credit concerns were balanced by a firmer session for U.S. equities .DJI.
* The three-year Australian bond contract YTTc1 eased 0.020 points to 93.450, while the 10-year bond contract YTCc1 was flat at 93.715. (Reporting by Wayne Cole; Editing by Jonathan Standing)
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