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Forex - AUD/USD drops on Spain concerns, sluggish retail sales

Published 05/29/2012, 10:12 PM
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Investing.com - The Australian dollar fell against the greenback on Wednesday on concerns Spain still struggle to prop up its banking system and regional governments, which sent higher-yielding currencies falling and the U.S. dollar rising.

Weaker-than-expected retail sales figures sent the Australian dollar dipping as well.

In Asian trading on Wednesday, AUD/USD hit 0.9786, down 0.63%, up from a session low of 0.9776 and off from a high of 0.9854.

The pair was likely to test support at 0.9726, the low of May 25, and resistance at 0.9898, the high on May 29.

The Spanish government is preparing to recapitalize the Bankia financial institution by EUR19 billion, while the regional government of Catalonia has asked Madrid for help refinancing its debts.

Reports that Spain will issue bonds to bail out its banks and regional governments — at a time when government debt yields have already spiked to around 7 percent — fueled fears the debt crisis is heating up in Spain, bruising higher-yielding currencies like the Australian dollar, which is sensitive to global growth rates.

Australian retail sales, meanwhile, fell 0.2% in April in wake of a 1.1% gain in March.

Markets were hoping for a gain of 0.2%

The Australian dollar was down against the euro and down against the yen, with EUR/AUD up 0.30% at 0.2734 and AUD/JPY down 0.61% at 77.81.

Later Wednesday in the U.S., pending homes sales figures are due out as are numbers on mortgage applications.

Australia is due to release figures on capital expenditures, building approvals and private-sector credit.






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