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Non-Tech : Bill Wexler's Trading Cabana -- Ignore unavailable to you. Want to Upgrade?

To: RockyBalboa who wrote (2645)	8/16/2007 3:33:07 AM
From: RockyBalboa	Respond to of 6370

Aussie dollar slumps to 5-mth lows on credit woes Thursday Aug 16 16:49 AEST By Anirban Nag SYDNEY, Aug 16 (Reuters) - The Australian dollar fell over 3 percent on Thursday to its lowest in nearly five months against the U.S. currency as investors dumped riskier assets and piled into safe-haven government debt amid a global credit squeeze. The Aussie <AUD=> briefly fell as low as $0.7998, its weakest since March 21 and a loss of nearly 11 percent since its July 25, 18-year peak of $0.8871, as contagion from the deepening credit market woes led to sharp falls in regional stock markets. It recovered to $0.8051/56 at 4:00 p.m. (0600 GMT), but was still down from $0.8246/49 late on Wednesday here. Carry trade liquidation also saw the Aussie fall to 92.66 yen <AUDJPY=R>, down over 16 percent since its July 20, 16-year high of 107.72 yen. It recovered to 93.53/63 in late trade, down from 96.10/20 on Wednesday. Under carry trades investors borrow in the low-yielding Japanese yen to buy high-yield currencies like the Aussie and New Zealand dollars, and these transactions had driven the Aussie's gains earlier in the year. "The Aussie has literally dropped like a stone," said Robert Rennie, chief currency strategist at Westpac. "There's no liquidity or logic to it, and certainly no mercy. In fact, this could well be described as a disruptive market requiring the central bank to step in a smooth things out." The sheer magnitude of the Australian dollar's fall, following on from heavy losses the previous day, led to expectations that the Reserve Bank of Australia (RBA) could intervene to check its slide. The RBA has been routinely selling Australian dollars in the last few years as the currency rose. The last time it bought the currency on a net basis in a month was back in late 2001. All eyes are now on a testimony by central bank Governor Glenn Stevens at a parliamentary hearing on Friday for his latest thoughts on monetary policy and the economy in light of the ongoing turmoil in global markets. Australian Treasurer Peter Costello said on Thursday that although there had been a significant fallout from the credit woes in the United States, the Australian banking sector was well capitalised and had sufficient liquidity. The Australian share market <.AXJO> ended 1.3 percent lower, recovering well after being down over 5 percent at one point on Thursday, with financial shares leading the way down. Australian mortgage lender RAMS Home Loans Group Ltd. <RHG.AX> said it had failed to roll over A$6.17 billion ($5.1 billion) in maturing notes due to a lack of liquidity in the U.S. commercial paper market, causing its shares to dive 36 percent. As investors fled risk, many sought the relative safety of sovereign debt, sharply lifting Australian bonds futures. The 10-year bond contract <YTCc1> added 0.02 points to 94.11, lowering yields to 5.89 percent when just a month ago they had been up around 6.30 percent