Aussie Erases Losses as Market Sentiment Turns to Optimism

The Australian dollar fell against most major currencies today, but reversed losses by the end of the session as attractiveness of riskier assets returned after market sentiment improved somewhat.
Investors’ mood was downbeat at the beginning of today’s trading session, but it brightened by the end of the day. It was not full-fledged risk-on sentiment, but there was definitely less negativity on the Forex market and commodity currencies profited from that. The weekend brings element of uncertainty because of rumors that Europe’s financial chiefs will discuss a bailout for Spain, but the week ended on more or less positive note.
Domestically, the Aussie (the nickname of the Australian currency) was supported by the report about trade balance that showed a deficit falling much more than anticipated. On a seasonally adjusted basis, the deficit shrank to A$203 million in April from A$1,079 million in March. A decrease to A$920 was predicted by experts. Speculators trimmed their bets on another interest rate cut by the Reserve Bank of Australia this week’s fundamental reports were unexpectedly good.
AUD/USD closed at 0.9913 up from 0.9894, while during the session the currency pair reached the low of 0.9821. AUD/JPY closed flat at 78.80, erasing the earlier slump to 77.68. EUR/AUD declined from 1.2688 to 1.2617 and its intraday minimum of 1.2583 was the lowest since April 16.

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