950803

Australian dollar ends

broadly firmer

SYDNEY: The Australian dollar ended broadly firmer on the crosses as it continued to benefit from Japanese and US attempts to depress the yen.

It found its meaty offshore gains a little too much to digest and surrendered some to profit-taking in an otherwise featureless local session. But traders said the pullback was neither unexpected nor large, which suggested it was well placed to take advantage of any further yen weakness.

The currency could make no progress on the US dollar itself, however, as sellers still crowded the US$0.7420/30 chart barrier and they looked for more range trading yet near term.

By 0645 GMT the local dollar was hovering at US$0.7392/97 from an early US$0.7415/20 and Wednesday's US$0.7402/07 close.

It slipped back to 66.89/99 yen from an early 67.54/64, but that was still a 4-1/2 month closing high and up on yesterday's late 66.45/54.

The unit has gained 2.5 percent since Wednesday morning, when Japan announced its package of measures to encourage Japanese investment abroad, and was a whopping 11.5 percent up on this time last month. Traders said the limited nature of the pullback so far suggested there was further scope on the upside yet, although much depended on how the US dollar fared.

The US currency faded in the face of profit taking to stand at 90.40/50 yen from an early 91.10/20, but again this was still its best finish since mid-March.

Traders said the market was waiting to see if the Bank of Japan and US Federal Reserve backed-up Wednesday successful intervention with another round today.

If such action was forthcoming and the yen fell further, then the local dollar would have another crack at the US$0.7420/30 barrier, traders said. Whether it could overcome the sellers there, rumoured to include a major Chinese bank defending an options play, remained very much an open question.

They cautioned the repeated failure to clear this hurdle had raised the risk of a correction to US$0.7330 or even US$0.7290.

The danger was heightened by a subdued performance from commodities, with the Commodity Research Bureau inded of futures contacts off 0.92 point to 233.0 Wednesday and gold softer.

However, anaysts noted copper rose sharply ovenight taking most base metals with it, and the CRBA was far from a perfect mirror of Australian's export mix.

They also believed there was good reason to export a gradual uptrend in commodity prices in the second half of the year given gathering signs of a rebound in the US economy.

Data from the US Wednesday showed new home sales rose 6.1 percent in June, the highest rate of growth in 1-1/2 years, while the index of leading indicators rose 0.2 percent, its first gain this year.

The next major domestic data is not cut until August 10, when unemployment figures for July are released.

The Australian currency extended its recent rally on the New Zealand dollar to end at NZ$1.1018/34 from NZ$1.0962/80, its firs local close above NZ$1.1000 since early May. In trade weighted terms it finished at 51.4 from 51.1 on Wednesday.-Reuter