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Australian dollar

slightly higher

SYDNEY: The Australian dollar ended local trading up from its opening levels but off its highs, after a large morning buy order saw the unit spike to above US $0.7360.

After support around 73 cents held firm despite some offshore selling, the currency had bounced slightly to be consolidating just under US $0.7330 when the buy orders were exercised.

Market players put the size of the parcel at A$200-300 million, and said it may have been shortcovering by a previous seller who had expected the Australian dollar to fall through key support levels around US $0.7290/00.

At 0700 GMT, the Australian dollar was at US $0.7349/54, down from US $0.7358/63 at 0230 GMT and US $0.7322/27 late on Thursday.

After the large purchase order this morning, the market had been reasonably square, the trader said.

The firmer tone to the currency was reflected in the trade weighted index which closed at 52.8 from an open of 52.6.

On the crosses, the Australian dollar was at 71.83/93 yen and 1.0882/93 marks, from 71.29/39 and 1.0809/23 at the open.

Traders said after the support around 73 cents had held for the past two nights, the dollar was likely to test its upside, as market sentiment was more fvourable.

While not ruling out another test of the downside, traders believed the support would hold again.

Apart from the buy order, improving commodity and base metal prices were seen as positives for the Australian dollar, although traders said it was a really sitting on the sidelines while attention remained focused on the US dollar.

After a softer New York close following some hedge fund selling, the US dollar had recovered some lost ground in Asian trading.

Although some further profit taking occurred in morning trading, Japanese institutional investors who missed Wednesday's rally emerged to buy on the dips.

At 0730 GMT, the US dollar was at 97.79/89 yen and 1.4817/20 marks, from a New York close of 97.50/55 and 1.4765/72.-Reuter