July 26, 2012
The Australian dollar is one US cent higher on hopes of a lasting solution to the eurozone government debt crisis.
At 1700 AEST, the local unit was trading at 103.39 US cents, up from 102.42 cents on Wednesday.
Since 0700 AEST on Thursday, the Australian dollar traded between 102.92 US cents and 103.47 cents.
On Wednesday night European Central Bank (ECB) council member Ewald Nowotny called for the euro zone’s bailout fund, European Stability Mechanism (ESM), to be given a banking licence.
A banking licence would give the ESM much greater scope to borrow money from the ECB.
Easy Forex currency dealer Anthony Botros said the Australian dollar rose following the comments.
‘‘That also boosted market sentiment and helped the Australian dollar stabilise,’’ Mr Botros.
He said the focus for the market now shifts to a speech by the ECB president in London on Thursday night, Australian time, and what he will say about the ESM banking licence idea.
‘‘If the market is given a further indication of solidarity in that region the Australian dollar will continue to test the July highs of 104.50 US cents,’’ Mr Botros.
‘‘So it seems as though the Aussie dollar is not only posing at the moment as a risk currency but as a bit of a safe-haven currency.
‘‘So it’s doubly supportive at this point.’’