The Australian dollar is hovering just above a four-month low this morning at US90.86c, as traders price in the growing probability of sharp rate cuts in Australia and the US dollar continues to strengthen.
The Australian dollar is hovering just above a four-month low this morning at US90.86c, as traders price in the growing probability of sharp rate cuts in Australia and the US dollar continues to strengthen.
The dollar has now fallen 7.1% in the last few weeks, from a high point of US97.77c on 16 July. That will be a little bit of welcome relief for exporters, who have watched the dollar soar from US87c at the start of 2008 and US78c at the start of 2007.
After rising 3.4% in the last two days, the Australian sharemarket fell sharply in early trade before recovering slightly.
The benchmark S&P/ASX200 index dropped 1.1% in the first hour of trade following a shocking night on Wall Street, with the Dow Jones industrial average plunging 1.9% on more bad news from the financial services sector.
In a remarkable move, big US bank Citigroup agreed to buy back more than $US7 billion of illiquid auction-rate securities and pay a $US100 million civil fine to settle charges it marketed the debt fraudulently.
Analysts now expect the other big banks will be forced to follow suit, further hampering their chances to stem the losses from the credit crunch.
That news weighed heavily on the US markets last night and the Australian market this morning, with the big Australian banks sold off again.
At 11:30am AEST the S&P/ASX200 was at 4958.8 points, down 24.5 points or 0.5%.
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