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Australian dollar

shows lower trend

SYDNEY: The Australian dollar drifted to a steady close as days of shuffling in a one cent range had traders hanging "Do not disturb" signs on dealing room doors.

A dearth of domestic data and a holiday in much of Europe provided further excuse for inactivity, said dealers. There was some life on the crosses as the yen and mark took a spill, but it came too late to help the AUD against its US counterpart.

"The market may as well have stayed in bed," said one. "Our customers are still generally bullish on the AUD; they'd just like to see it 1/2 cent lower before they buy." By 0645 GMT it was disappointing them at US$0.7413/18 from US$0.7415/20 Monday. The strength of the bonds holding the unit were demonstrated first offshore when US bank selling saw it test support under 74 cents only to be rescued by Singapore and Swiss buying.

The bounce sparked short covering and saw the unit probe minor resistance at US$0.7430 in early trade here. However, underlying demand failed to follow through and the hapless dollar spent the rest of the day loitering around US$0.7310.

Traders said the deadlock meant stops were building behind US$0.7380 and US$0.7460, so a break of either would likely yield a sharp move. Targets were US$0.7330 and US$0.7510, respectively the next support and resistance levels.

The currency was equally subdued on the crosses for most of the day but perked up in late trade as the Bank of Japan intervened to sell yen and buy US dollars.

The BOJ's action was reinforced by data showing Japan's trade surplus shrank to $9.43 billion in July from $12.25 billion a year earlier, which was well below forecast of $11.2 billion. Its surplus with the US, a major driving force in the yen's long rise, declined to $3.87 billion from $5.62 billion.

The combination lifted the US dollar by almost a full yen to hit 94.30/40 in late trade here, while the local unit rose to 69.84/94 yen from 69.35/45.

The local currency also gained ground on the mark to 1.0669/84 from 1.0630/41 late Monday and edged up to 52.3 in trade weighted terms from 52.2.

Average forecasts are for a 0.7 percent dip in July, which would reinforce expectations that the current account deficit had peaked in May. However, estimates range from a 4.0 percent fall right up to a 5.0 percent rise and any result close to the latter would be a severe blow to the local dollar.-Reuter