By TraderVox.com
Tradervox.com (Dublin) – After two German law makers indicated that Germany is not opposed to Spain requesting for precautionary credit line, the market experienced a surge in risk appetite which pushed the commodity related high. The Australian dollar rose to the highest level against the greenback in two weeks while the Australian government bonds dropped. Speculation Spain will go ahead and ask for precautionary credit line increased as Moody’s credit rating held the record low credit rating for Spain. Moody’s also indicated that it held a negative outlook on Spain, as concerns still linger on euro region economy. Asia pacific currencies advance was also supported by the advance in Asian stocks as reports from the US are indicating economic improvement.
According to Robert Rennie, the Chief Currency Strategist in Sydney at Westpac Banking Corp, the speculation surrounding the Spanish bailout deal has simmered in the resent trading session and the feeling is that it is coming soon. Robert noted that this will remove pressure from the Aussie in the coming couple of sessions before the end of the week. The Australian government bonds fell, rising the 10-year benchmark yield by 0.09 percentage point to 3.12 percent. The yield had reached its highest since September 25 of 3.16 percent earlier in the day.
In an Australian auction held yesterday, the ten-year securities attracted bids for 5.02 times the amount of note offered, making this the biggest auction bid since 2009. The Australian dollar advance came after Michael Meister, the deputy caucus leader of Angela Merkel’s Christian Democratic party, and the party’s budget spokesman Norbert Barthle, indicated that they were willing to accept Spain’s request for precautionary credit line.
The Australian dollar advanced by 0.3 percent against the US dollar to trade at $1.0307 at the close of trading in Sydney. The currency had earlier touched its strongest since October 2 of $1.0324. The Aussie was up by 0.1 percent against the yen to trade at 81.12 yen. The kiwi was up by 0.4 percent against the US dollar trading at 81.75 US cents, the currency had dropped by 0.5 percent the previous day.
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