Dollar Unchanged Despite British Downgrade

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February 24th, 2013

THE Australian dollar is virtually unchanged, despite losing ground following a downgrade to Britain's credit rating.

At 0700 AEDT on Monday, the currency was trading at 103.14 US cents, up slightly from 103.13 cents on Friday afternoon.

Westpac New Zealand senior market strategist Imre Speizer said the Australian dollar traded between 102.96 US cents and 103.42 US cents over the weekend but was unable to gather momentum in either direction.

"It has been pretty directionless, it just chopped around," he said.

"The Aussie has spiked in both directions but the net change is not too different to the Friday close."

Mr Speizer said the currency weakened slightly against the US dollar early on Monday after ratings agency Moody's downgraded Britain's credit rating to AA1, stripping it of its prized AAA rating.

Moody's warned that economic growth in Britain is likely to remain sluggish for several years.

"That was partly priced in but it was negative (for the Australian dollar)," Mr Speizer said.

However, the Australian dollar hit a one-year high against the British pound following the downgrade, reaching 68.39 pence, its highest level since February 2012.

It also hit a four-and-a-half-year high against the Japanese yen of 97.725 on speculation surrounding the appointment of a new governor of the Bank of Japan

Mr Speizer said the key event for the Australian dollar during Monday's Asian session would be the release of Chinese manufacturing data during the afternoon (Australian time).