From The Age :
Dollar remains above 97 US cents
July 14, 2008
The Australian dollar has opened stronger after posting a fresh 25-year high over the weekend on the back of a weaker US dollar.
The local currency soared to above $US0.9700 for the first time since the days of a fixed exchange rate as continued credit market concerns battered the US currency.
At 7am, the Australian dollar was trading at $US0.9705/12, up one US cent from Friday's close of 0.9605/09. During the weekend offshore session, the Australian dollar traded between a low of $US0.9607 and a high of 0.9718.
The Australian dollar reached $US0.9668 on June 30 this year, but had not been above $US0.9700 since February 16, 1983, when it hit $US0.9710.
Reports the US government may be forced to take over troubled government-sponsored mortgage backers Fannie Mae and Freddie Mac caused investors to scale back expectations of US interest rate rises and sell the US dollar.
The US dollar suffered a broad based fall against a range of currencies, and came within one US cent of its record low of $US1.6019 versus the euro, reached in April this year.
''The financial system woes in the US persist, with Fannie Mae and Freddie Mac in trouble,'' RBC Capital Markets senior currency strategist Sue Trinh said.
''It was all bad news for the US dollar.''
The US Treasury department was expected to issue a statement today (AEST) regarding its support for the two companies and what action it might take to ensure their survival.
''That's got markets on tenterhooks waiting on a potential rescue package,'' Ms Trinh said.
Ms Trinh said the momentum from the weekend session could ''easily carry the Aussie higher, or allow it to sustain the gains'' from the weekend session.
AAP
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