Australian dollar drops to 12-month low

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The Australian dollar fell below 95.00 US cent mark despite the release of stronger-than-expected local economic data. At midday, the Australian dollar traded at 94.98 US cents, down from yesterday’s 96.17 cents.

CMC Markets foreign exchange dealer, Tim Waterer, said the dollar’s weak reaction to the economic figures – for home building approvals and the trade surplus, shows that European debt worries still dominate the market’s mood.

“The data overall was quite encouraging, taken in isolation. Seeing those sorts of numbers we should have seen a half-a-cent rally in the Australian dollar but instead we got a downward movement,” he said.

“That is just a pointer to what the overwhelming sentiment, which is to sell first in reaction to the events that are happening offshore.”

As per Mr. Waterer, the data came just as the Australian stockmarket was suffering its heaviest fall of the morning.

“That effectively took away any buying momentum the Australian dollar may have had going into those stronger than expected trade and building approvals data,” he said.