re: australian dollar, page-30

re: australian dollar AUSTRALIAN DOLLAR AT EIGHT WEEK LOW!!
Great for gas prices & asset sale!!

THE Australian dollar closed below US65c at an eight-week low as a record monthly fall in Japan's industrial output led to worries about its local impact.

The first monthly drop in Australian private borrowing levels also put the local currency under pressure as financial markets priced in another 100 basis points interest rate cut in February.

At 1700 AEDT, the Australian dollar was trading at $US0.6454/58, down 2.2 per cent from Thursday's close of $US0.6599/02, marking the weakest close since December 5.

During the day, the currency moved between an early morning high of $US0.6523 and an afternoon low of $US0.6425.

The Australian dollar dived to an eight-week low after 1400 AEDT on news Japanese industrial production fell by a record 9.6 per cent in December.

The result was the steepest monthly decline since official government data began in February 1953, and followed November's 8.5 per cent fall.

Japan is Australia's biggest export destination and a major buyer of commodities.

A senior currency analyst with financial markets research group Forecast, Lee Wai Tuck, said the domestic currency was sold off as traders worried about what effect a contracting Japanese economy would have on Australia.

"Many people are starting to revise down their outlook for the Australian economy,'' Mr Lee said from Singapore.

"There are concerns about how Australia can weather the current global slowdown.

"That's one of the reasons why markets are selling the Aussie against the yen and the Aussie against the Kiwi.''

The latest dire news from Japan comes after the International Monetary Fund predicted the Japanese economy would shrink by 2.6 per cent in 2009 as global growth slowed to a minuscule 0.5 per cent.

The Australian dollar extended its fall in late morning trade after central bank data showed total private sector borrowing fell by 0.3 per cent December, marking the first monthly fall in 16 years.

Financial markets now expect the Reserve Bank of Australia (RBA) to slash interest rates by 100 basis points at its next board meeting on February 3.

This would take the cash rate to 3.25 per cent, the lowest since February 1964.
Another weak set of US economic growth data was expected to push the Australian dollar down to $US0.6400 during offshore Friday night trade.

Economists predict gross domestic product figures for the December quarter will show an annualised contraction of at least five per cent, which would be the worst result in 26 years.