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Aussie dollar drops to 3-week lows; bonds rally

Published: 28 Oct 2009 17:18:43 PST

__________AUSTRALIAN CREDIT/FOREX (0100 GMT) SNAPSHOT__________ FOREIGN EXCHANGE (against previous Sydney close) <AUD=> 0.8965/68 (0.9093/98) <AUDNZD=R>1.2469/82 (1.2311/31) <AUDJPY=R> 81.16/20 (82.90/96) <JPY=> 90.52/56 (91.16/18) <AUDEUR=R> 0.6096/6101(0.6139/43) <EUR=> 1.4700/04 (1.4811/12) DEBT FUTURES CASH YIELDS 90-DAY BILL<YBAc1> (DEC) 95.78 (+0.070) <AU3MBB=RR> 3.65(3.70) 3-YR BOND <YTTc1> (DEC) 95.81 (+0.160) <AU3YT=RR> 5.06(5.23) 10-YR BOND <YTCc1> (DEC) 94.415(+0.085) <AU10YT=RR> 5.63(5.71) 3/10 SPREAD +0.90 (+0.83) AUST/US 10-YR SPREAD +222(+229) S&P/ASX 200 4596.1 (4685.1) US10-YR <US10YT=RR> 3.41(3.47) __________________________ Oct 29______________________________

* The Australian dollar extended losses on Thursday, falling against the U.S. dollar and the yen as speculators unwound long positions and book profits. It received some support around $0.8950 where stop losses have been lined up.

* Shortly after midday, the Aussie was at $0.8965, down from $0.9093 seen late here on Wednesday and nearly 4 cents below a 14-month high of $0.9330 struck last week. It fell to as low as $0.8942 which was its lowest since Oct. 8.

* The U.S. dollar, traded firm above the 76 mark against a basket of currencies <.DXY> <=USD>, pulling further away from a 14-month low of 74.94. The yen <JPY=> rose broadly, with its gains on the crosses more impressive as speculators unwound long euro/short yen positions. <EURJPY=R>.

* Aussie <AUDJPY=R> dropped to 81.16 yen, from 82.90 yen late on Wednesday. The Aussie/yen has dived from a 1-year high of 85.31 on Oct. 23 as some of the leveraged carry trades funded in the Japanese currency were unwound.

* But Aussie jumped on the kiwi, <AUDNZD=R>, rising to its highest in nearly three months at NZ$1.2501. The kiwi <NZD=D4> was slammed after RBNZ did not sound as hawkish about rates as many in the market had bet on. [nSYD80874].

* All eyes on third-quarter U.S. gross domestic product (GDP) later on Thursday. Data this week from the U.S. has raised questions about a sustained recovery, with consumer confidence dipping to recessionary levels and new home sales falling unexpectedly.

* Australian bond futures rallied on safe-haven inflows which gathered pace on fresh doubts about the pace of an economic recovery after poor U.S. housing data. Bonds also benefited from a paring in bets for a sharp rate rise in local rates next week.

* Three-year futures <YTTc1> were 0.160 points higher at 94.81 while the 10-year contract <YTCc1> was 0.085 points higher at 94.415.