Aussie dollar recovers, but still seen vulnerable

SYDNEY, Aug 20 (Reuters) The Australian dollar popped briefly above 80 U.S. cents on Monday, marking a bounce of 4 percent from a 10-month low on Friday, after the Federal Reserve sparked a rally in Wall Street stocks, but later dropped back.

The local currency fell as low as SYDNEY, Aug 20 (Reuters) The Australian dollar popped briefly above 80 U.S. cents on Monday, marking a bounce of 4 percent from a 10-month low on Friday, after the Federal Reserve sparked a rally in Wall Street stocks, but later dropped back.

The local currency fell as low as $0.7670 and 85.95 yen, a 14-month trough, in London trade on Friday before the U.S.

central bank lowered its discount rate to banks in response to concerns about the squeeze in global credit markets.

The Fed kept its benchmark rate steady at 5.25 percent.

Suncorp treasury strategist Peter Pontikis said the drubbing of the Aussie was the worst in at least a decade and harked back to ''wrenching'' and ''erratic behaviour'' of the mid to late 1980s.

''The Australian dollar looks likely to remain hostage to changes in global risk appetite,'' said Tony Morriss, senior currency strategist at ANZ Investment Bank.

By 9:56 a.m. (2356 GMT) the Aussie had pulled back to $0.7926/29, compared with $0.7810/15 here late on Friday, according to Reuters data. Its session high was $0.8001, still about 10 percent below its 18-year peak of $0.8871 on July 25.

Against the Japanese currency, the Aussie was quoted at 90.46/56 yen, up from 87.81.81 here late on Friday, but still about 16 percent below its July 20, 16-year peak of 107.72 yen.

High-yielding currencies, such as the Aussie, have been under pressure for three weeks as the appetite for risk has soured amid wild swings in global stock markets on fears the fallout from the U.S. subprime mortgage debacle could hurt global economic growth.

''If global economic growth isn't hurt anywhere near as much as currently expected, then some recovery in the Australian dollar would be in prospect over the next three to six months,'' said John Kyriakopoulos, currency strategist at nabCapital.

But Kyriakopoulos said he did not anticipate a sharp recovery in the local currency because neither risk appetite or leverage were likely to recover to earlier elevated levels anytime soon.

The Aussie has been hardest hit against the yen these past three weeks as investors have dumped risky bets on yen carry trades, which involve borrowing the low-yielding yen to invest in assets in high-yielding currencies, such as the Aussie and kiwi.

In an attempt to cushion the fall in the Aussie, the Reserve Bank of Australia (RBA) intervened in foreign exchange markets in offshore trade on Thursday to restore liquidity for the Aussie.

RBA Governor Glenn Stevens on Friday played down the threat of the turmoil in financial markets to the domestic economy and said he remained concerned about domestic inflation accelerating.

''The maintenance of a hawkish tone by the RBA on Friday looks to be a marginal issue considering the global nature of the pressures on the Aussie and kiwi at present,'' said ANZ's Morriss.

Reuters CS VP0555 .7670 and 85.95 yen, a 14-month trough, in London trade on Friday before the U.S.

central bank lowered its discount rate to banks in response to concerns about the squeeze in global credit markets.

The Fed kept its benchmark rate steady at 5.25 percent.

Suncorp treasury strategist Peter Pontikis said the drubbing of the Aussie was the worst in at least a decade and harked back to ''wrenching'' and ''erratic behaviour'' of the mid to late 1980s.

''The Australian dollar looks likely to remain hostage to changes in global risk appetite,'' said Tony Morriss, senior currency strategist at ANZ Investment Bank.

By 9:56 a.m. (2356 GMT) the Aussie had pulled back to SYDNEY, Aug 20 (Reuters) The Australian dollar popped briefly above 80 U.S. cents on Monday, marking a bounce of 4 percent from a 10-month low on Friday, after the Federal Reserve sparked a rally in Wall Street stocks, but later dropped back.

The local currency fell as low as $0.7670 and 85.95 yen, a 14-month trough, in London trade on Friday before the U.S.

central bank lowered its discount rate to banks in response to concerns about the squeeze in global credit markets.

The Fed kept its benchmark rate steady at 5.25 percent.

Suncorp treasury strategist Peter Pontikis said the drubbing of the Aussie was the worst in at least a decade and harked back to ''wrenching'' and ''erratic behaviour'' of the mid to late 1980s.

''The Australian dollar looks likely to remain hostage to changes in global risk appetite,'' said Tony Morriss, senior currency strategist at ANZ Investment Bank.

By 9:56 a.m. (2356 GMT) the Aussie had pulled back to $0.7926/29, compared with $0.7810/15 here late on Friday, according to Reuters data. Its session high was $0.8001, still about 10 percent below its 18-year peak of $0.8871 on July 25.

Against the Japanese currency, the Aussie was quoted at 90.46/56 yen, up from 87.81.81 here late on Friday, but still about 16 percent below its July 20, 16-year peak of 107.72 yen.

High-yielding currencies, such as the Aussie, have been under pressure for three weeks as the appetite for risk has soured amid wild swings in global stock markets on fears the fallout from the U.S. subprime mortgage debacle could hurt global economic growth.

''If global economic growth isn't hurt anywhere near as much as currently expected, then some recovery in the Australian dollar would be in prospect over the next three to six months,'' said John Kyriakopoulos, currency strategist at nabCapital.

But Kyriakopoulos said he did not anticipate a sharp recovery in the local currency because neither risk appetite or leverage were likely to recover to earlier elevated levels anytime soon.

The Aussie has been hardest hit against the yen these past three weeks as investors have dumped risky bets on yen carry trades, which involve borrowing the low-yielding yen to invest in assets in high-yielding currencies, such as the Aussie and kiwi.

In an attempt to cushion the fall in the Aussie, the Reserve Bank of Australia (RBA) intervened in foreign exchange markets in offshore trade on Thursday to restore liquidity for the Aussie.

RBA Governor Glenn Stevens on Friday played down the threat of the turmoil in financial markets to the domestic economy and said he remained concerned about domestic inflation accelerating.

''The maintenance of a hawkish tone by the RBA on Friday looks to be a marginal issue considering the global nature of the pressures on the Aussie and kiwi at present,'' said ANZ's Morriss.

Reuters CS VP0555 .7926/29, compared with SYDNEY, Aug 20 (Reuters) The Australian dollar popped briefly above 80 U.S. cents on Monday, marking a bounce of 4 percent from a 10-month low on Friday, after the Federal Reserve sparked a rally in Wall Street stocks, but later dropped back.

The local currency fell as low as $0.7670 and 85.95 yen, a 14-month trough, in London trade on Friday before the U.S.

central bank lowered its discount rate to banks in response to concerns about the squeeze in global credit markets.

The Fed kept its benchmark rate steady at 5.25 percent.

Suncorp treasury strategist Peter Pontikis said the drubbing of the Aussie was the worst in at least a decade and harked back to ''wrenching'' and ''erratic behaviour'' of the mid to late 1980s.

''The Australian dollar looks likely to remain hostage to changes in global risk appetite,'' said Tony Morriss, senior currency strategist at ANZ Investment Bank.

By 9:56 a.m. (2356 GMT) the Aussie had pulled back to $0.7926/29, compared with $0.7810/15 here late on Friday, according to Reuters data. Its session high was $0.8001, still about 10 percent below its 18-year peak of $0.8871 on July 25.

Against the Japanese currency, the Aussie was quoted at 90.46/56 yen, up from 87.81.81 here late on Friday, but still about 16 percent below its July 20, 16-year peak of 107.72 yen.

High-yielding currencies, such as the Aussie, have been under pressure for three weeks as the appetite for risk has soured amid wild swings in global stock markets on fears the fallout from the U.S. subprime mortgage debacle could hurt global economic growth.

''If global economic growth isn't hurt anywhere near as much as currently expected, then some recovery in the Australian dollar would be in prospect over the next three to six months,'' said John Kyriakopoulos, currency strategist at nabCapital.

But Kyriakopoulos said he did not anticipate a sharp recovery in the local currency because neither risk appetite or leverage were likely to recover to earlier elevated levels anytime soon.

The Aussie has been hardest hit against the yen these past three weeks as investors have dumped risky bets on yen carry trades, which involve borrowing the low-yielding yen to invest in assets in high-yielding currencies, such as the Aussie and kiwi.

In an attempt to cushion the fall in the Aussie, the Reserve Bank of Australia (RBA) intervened in foreign exchange markets in offshore trade on Thursday to restore liquidity for the Aussie.

RBA Governor Glenn Stevens on Friday played down the threat of the turmoil in financial markets to the domestic economy and said he remained concerned about domestic inflation accelerating.

''The maintenance of a hawkish tone by the RBA on Friday looks to be a marginal issue considering the global nature of the pressures on the Aussie and kiwi at present,'' said ANZ's Morriss.

Reuters CS VP0555 .7810/15 here late on Friday, according to Reuters data. Its session high was SYDNEY, Aug 20 (Reuters) The Australian dollar popped briefly above 80 U.S. cents on Monday, marking a bounce of 4 percent from a 10-month low on Friday, after the Federal Reserve sparked a rally in Wall Street stocks, but later dropped back.

The local currency fell as low as $0.7670 and 85.95 yen, a 14-month trough, in London trade on Friday before the U.S.

central bank lowered its discount rate to banks in response to concerns about the squeeze in global credit markets.

The Fed kept its benchmark rate steady at 5.25 percent.

Suncorp treasury strategist Peter Pontikis said the drubbing of the Aussie was the worst in at least a decade and harked back to ''wrenching'' and ''erratic behaviour'' of the mid to late 1980s.

''The Australian dollar looks likely to remain hostage to changes in global risk appetite,'' said Tony Morriss, senior currency strategist at ANZ Investment Bank.

By 9:56 a.m. (2356 GMT) the Aussie had pulled back to $0.7926/29, compared with $0.7810/15 here late on Friday, according to Reuters data. Its session high was $0.8001, still about 10 percent below its 18-year peak of $0.8871 on July 25.

Against the Japanese currency, the Aussie was quoted at 90.46/56 yen, up from 87.81.81 here late on Friday, but still about 16 percent below its July 20, 16-year peak of 107.72 yen.

High-yielding currencies, such as the Aussie, have been under pressure for three weeks as the appetite for risk has soured amid wild swings in global stock markets on fears the fallout from the U.S. subprime mortgage debacle could hurt global economic growth.

''If global economic growth isn't hurt anywhere near as much as currently expected, then some recovery in the Australian dollar would be in prospect over the next three to six months,'' said John Kyriakopoulos, currency strategist at nabCapital.

But Kyriakopoulos said he did not anticipate a sharp recovery in the local currency because neither risk appetite or leverage were likely to recover to earlier elevated levels anytime soon.

The Aussie has been hardest hit against the yen these past three weeks as investors have dumped risky bets on yen carry trades, which involve borrowing the low-yielding yen to invest in assets in high-yielding currencies, such as the Aussie and kiwi.

In an attempt to cushion the fall in the Aussie, the Reserve Bank of Australia (RBA) intervened in foreign exchange markets in offshore trade on Thursday to restore liquidity for the Aussie.

RBA Governor Glenn Stevens on Friday played down the threat of the turmoil in financial markets to the domestic economy and said he remained concerned about domestic inflation accelerating.

''The maintenance of a hawkish tone by the RBA on Friday looks to be a marginal issue considering the global nature of the pressures on the Aussie and kiwi at present,'' said ANZ's Morriss.

Reuters CS VP0555 .8001, still about 10 percent below its 18-year peak of SYDNEY, Aug 20 (Reuters) The Australian dollar popped briefly above 80 U.S. cents on Monday, marking a bounce of 4 percent from a 10-month low on Friday, after the Federal Reserve sparked a rally in Wall Street stocks, but later dropped back.

The local currency fell as low as $0.7670 and 85.95 yen, a 14-month trough, in London trade on Friday before the U.S.

central bank lowered its discount rate to banks in response to concerns about the squeeze in global credit markets.

The Fed kept its benchmark rate steady at 5.25 percent.

Suncorp treasury strategist Peter Pontikis said the drubbing of the Aussie was the worst in at least a decade and harked back to ''wrenching'' and ''erratic behaviour'' of the mid to late 1980s.

''The Australian dollar looks likely to remain hostage to changes in global risk appetite,'' said Tony Morriss, senior currency strategist at ANZ Investment Bank.

By 9:56 a.m. (2356 GMT) the Aussie had pulled back to $0.7926/29, compared with $0.7810/15 here late on Friday, according to Reuters data. Its session high was $0.8001, still about 10 percent below its 18-year peak of $0.8871 on July 25.

Against the Japanese currency, the Aussie was quoted at 90.46/56 yen, up from 87.81.81 here late on Friday, but still about 16 percent below its July 20, 16-year peak of 107.72 yen.

High-yielding currencies, such as the Aussie, have been under pressure for three weeks as the appetite for risk has soured amid wild swings in global stock markets on fears the fallout from the U.S. subprime mortgage debacle could hurt global economic growth.

''If global economic growth isn't hurt anywhere near as much as currently expected, then some recovery in the Australian dollar would be in prospect over the next three to six months,'' said John Kyriakopoulos, currency strategist at nabCapital.

But Kyriakopoulos said he did not anticipate a sharp recovery in the local currency because neither risk appetite or leverage were likely to recover to earlier elevated levels anytime soon.

The Aussie has been hardest hit against the yen these past three weeks as investors have dumped risky bets on yen carry trades, which involve borrowing the low-yielding yen to invest in assets in high-yielding currencies, such as the Aussie and kiwi.

In an attempt to cushion the fall in the Aussie, the Reserve Bank of Australia (RBA) intervened in foreign exchange markets in offshore trade on Thursday to restore liquidity for the Aussie.

RBA Governor Glenn Stevens on Friday played down the threat of the turmoil in financial markets to the domestic economy and said he remained concerned about domestic inflation accelerating.

''The maintenance of a hawkish tone by the RBA on Friday looks to be a marginal issue considering the global nature of the pressures on the Aussie and kiwi at present,'' said ANZ's Morriss.

Reuters CS VP0555 .8871 on July 25.

Against the Japanese currency, the Aussie was quoted at 90.46/56 yen, up from 87.81.81 here late on Friday, but still about 16 percent below its July 20, 16-year peak of 107.72 yen.

High-yielding currencies, such as the Aussie, have been under pressure for three weeks as the appetite for risk has soured amid wild swings in global stock markets on fears the fallout from the U.S. subprime mortgage debacle could hurt global economic growth.

''If global economic growth isn't hurt anywhere near as much as currently expected, then some recovery in the Australian dollar would be in prospect over the next three to six months,'' said John Kyriakopoulos, currency strategist at nabCapital.

But Kyriakopoulos said he did not anticipate a sharp recovery in the local currency because neither risk appetite or leverage were likely to recover to earlier elevated levels anytime soon.

The Aussie has been hardest hit against the yen these past three weeks as investors have dumped risky bets on yen carry trades, which involve borrowing the low-yielding yen to invest in assets in high-yielding currencies, such as the Aussie and kiwi.

In an attempt to cushion the fall in the Aussie, the Reserve Bank of Australia (RBA) intervened in foreign exchange markets in offshore trade on Thursday to restore liquidity for the Aussie.

RBA Governor Glenn Stevens on Friday played down the threat of the turmoil in financial markets to the domestic economy and said he remained concerned about domestic inflation accelerating.

''The maintenance of a hawkish tone by the RBA on Friday looks to be a marginal issue considering the global nature of the pressures on the Aussie and kiwi at present,'' said ANZ's Morriss.

Reuters CS VP0555