Dollar over US90c after Bernanke speech

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THE dollar opened above US90c today after comments by the head of the US central bank lifted market sentiment on Friday night.

At 7am (AEST) today, the local unit was trading at $US0.9019/23, around US1.5c higher than Friday’s close of $US0.0.8869/71.

Since 5pm on Friday, the local currency traded between $US0.8861 and $US0.9030.

On Friday night, the US Federal Reserve chief said the Fed was prepared to take aggressive steps to boost the US economy if the outlook worsened in a speech to global central bankers.

Fed Chairman Ben Bernanke said there still was as a good chance that US economic expansion in 2011 will increase, despite a sharp fall in US economic growth to 1.6 per cent in the April-June period.

Bank of New Zealand currency strategist Mike Jones said Bernanke’s speech brightened market sentiment.

“The Aussie dollar climbed steadily throughout most of the Friday night session, Mr Jones said.

“Not only did he down play the US recession concerns, but also very much left the door open to further stimulus from the Fed should the US outlook deteriorate further.

“That tended to support the high-yielding risk-sensitive currencies like the Australian dollar,” he said.

Key data due locally this week include Australian Gross Domestic Product (GDP) figures and Chinese manufacturing data, both on Wednesday.

There are also US unemployment data on Friday night (AEST) and Euro zone GDP on Thursday night.

“Earlier in the week, we’ll probably see the Australian dollar supported around these resonable high levels,” Mr Jones said.

“I suspect, if we see this week’s data allay some of those concerns about a double dip global recession, that will pave the way for a higher Australian dollar.”

Mr Jones predicted the local unit would trade today between $US0.8970 and $US0.9050.