Whether this holds true in this case I'm not sure..Article from...

Whether this holds true in this case I'm not sure..

Article from smh :

http://www.smh.com.au/business/markets/dollar-opens-higher-as-greenback-slips-20100730-10yer.html



Dollar opens higher as greenback slips
July 30, 2010 - 7:41AM

The Australian dollar has opened higher today as investors buy the currency ahead of a month-end readjustment of portfolios.

At 7am east-coast time, the Australian dollar was trading at 90.02 US cents, up 0.12 per cent from yesterday's close of 89.91 US cents. It was also buying 78.12 yen, 68.81 euro cents and 57.62 pence.

Since 5pm yesterday, the domestic dollar traded between 89.52 and 90.44 US cents.

Commonwealth Bank vice-president of institutional banking and markets, Tim Kelleher, said the Australian dollar received support on speculation there would be a large order for the currency as investors adjust their asset holdings.

"There is a rumour that five billion of Aussie is going to bought in London for a fix tonight," Mr Kelleher said.

"That has been the big rumour and why the Aussie has outperformed overnight."

Investors reweight their portfolios at the end of the month, quarter and half-year periods for larger-than-expected movements in asset classes.

The Standard & Poor's 500 index has risen about eight per cent in July, while Australia's benchmark S&P/ASX200 index has risen 6.1 per cent in the month.

"From what I can gather, the month-end flows are selling US dollars and that is the probably the biggest thing," Mr Kelleher said.

"The fund managers readjust all their portfolios at month-end, depending on what equities have done.

"Equities have had a reasonably strong month, so what then happens is they have to adjust their hedges."

Foreign exchange hedges are used as insurance to minimise the exposure of currency volatility.

Mr Kelleher forecast the Australian dollar to trade between 89.75 and 90.25 US cents during today's Asian session.