Dollar weaker as Wall St falls from Heraldsun Newspaper

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Dollar weaker as Wall St falls ---
http://www.news.com.au/heraldsun/story/0,21985,24674264-5012062,00.html
November 19, 2008 07:37am



THE dollar opened weaker today as a late slump on Wall Street hurt demand for risk-driven currencies.

At 7am AEDT, the dollar was trading at $US0.6440/45, down 0.3 per cent from yesterday's close of $US0.6458/62, marking the weakest opening level since November 13.

During the overnight session, the local unit moved between a late offshore low of $US0.6438 and a pre-dawn high of $US0.6575, a 2.1 per cent range.

The low point was 34.6 per cent below the 25-year high of $US0.9849 reached in mid-July, but it was still 7.1 per cent above late October's five and a half year low of $US0.6012.

The local unit hit its offshore low minutes before the local session opened, as New York's Dow Jones Industrial Average was about to enter a volatile final hour of trading on Wall Street, at one stage down two per cent.

"Currencies have been following the Dow tit for tat," OzForex corporate dealer John Corcoran said from Toronto.

As risk appetite waned, the dollar faltered as investors bought back into the US currency to access US Treasury bonds.

"If equities are doing well, they sell the US dollar; if they're not doing well, they buy the US dollar," Mr Corcoran said.

"The foreign exchange market has been doing this for the last week.

"People are pessimistic on the whole economic outlook, therefore there's flight to safety in US Treasuries, and they buy US dollars."

The mood on Wall Street remained sour after US Treasury Secretary Henry Paulson told Congress the US government's $US700 billion ($1.08 trillion) financial rescue program was designed to stabilise financial markets rather than provide an economic stimulus.

"The rescue package was not intended to be an economic stimulus or an economic recovery package," Mr Paulson testified to the House Financial Services Committee in Washington.

Mr Corcoran said traders would monitor speeches from Reserve Bank of Australia (RBA) governor Glenn Stevens and assistant governor, economics, Malcolm Edey today for clues on whether the central bank would intervene again in the currency market.

The RBA last propped up the dollar on November 13, when the currency hit a two-week low of $US0.6360.

Mr Corcoran said the dollar was likely to trade between $US0.6350 and 0.6600 today.