Aust dollar closes lower on weak equity
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AAP
2009-11-20
The Australian dollar closed lower on Friday, after weakness on equity markets and a late rally on the back of a spike in the gold price.
At 1700 AEDT, the Australian dollar was trading at $US0.9196/98, down from Thursday's close of $US0.9238/42.
During the domestic session, the local unit traded between $US0.9152 and $US0.9215.
CMC Markets foreign exchange dealer Tim Waterer said the local currency took it's lead from a spike in the price of spot gold around 1600 AEDT.
The local unit started weaker after a round of US dollar buying overnight and into the Asian session.
"That kept a lid on the Aussie dollar for the most part.
"What we saw in the afternoon was a jump in the price of spot gold."
The rally came after the price of gold jumped from $US1,139 an ounce to $US1,144 in the space of a couple of dollars.
"That seemed to provide a lift to the commodity currencies such as the Australian dollar, so that's really been the main movement this afternoon," Mr Waterer said.
The Australian stock market ended the week lower after falls across the board following losses on Wall Street and commodity markets.
The benchmark S&P/ASX200 index closed down 63.4 points, or 1.33 per cent, at 4,685.8 points, while the broader All Ordinaries index lost 61.1 points, or 1.28 per cent, to 4,706.7 points.
"Despite the continued weakness on the local bourse, the Aussie dollar was able to move higher in afternoon trade just based on that stronger gold price," he said.
"That's what the Aussie took the lead from".
The spot price of gold at the close of trade in Sydney was $US1,145.10 an ounce.
In the absence of any significant US data due out in overnight trade, the Australian dollar would stay buoyant while gold pushed towards the $US1,150 level.
"The key factors in terms of the Australian dollar will be how US stocks react after what was a disappointing Thursday and the direction of risk appetite tonight."
He said there had been no drop off in demand for gold.
"By and large gold continues to look very strong and the long term forecasts are quite high as well and that does bode well for the Aussie dollar in the short term."
