PAGE ONE

Aussie dollar dives towards half a US dollar

The Australian dollar is peering into a black hole after its latest fall to record lows.

The currency hit an alltime low of 50.76 US cents this morning, and has failed to bounce up very far since.

At noon it was 50.77 US cents.

"I don't think the market was paying particular attention to any fundamentals - whether they be bullish or bearish. It was just a herd mentality and a matter of sell at all costs," a dealer at a major Australian trading bank said.

"When that happens you really start to feel it."

The Australian dollar's previous record low was 51.10 US cents which it traded on October 31.

In London overnight it dived to 50.88 from the local closing price of 51.33 US cents, and from there it rebounded to just 51.15 before falling again today.

"The Australian dollar now looks likely to head below 50 US cents in short order as the recent price action has emboldened the bears," Greg McKenna, market strategist at National Australia Bank said.

"We continue to see the Australian dollar as offering no compelling reason to buy it, or Australian assets, at present."

Mr McKenna said it was on for young and old overnight with a raft of sellers looking for the Australian dollar overnight.

"The weakness of the euro no doubt contributed to the push lower but we continue to see the Australian dollar as inherently weak in its own right," he said.

Richard Yetsenga, currency strategist at Deutsche Bank, said he wouldn't be surprised to see the currency at the end of the year below 50 US cents.

"While the same factors remain in place. While the domestic economy is slowing.

"While the global environment is slowing and commodity prices are coming off the Aussie will remain under pressure.

"That doesn't necessarily mean it will go down but it certainly stops it going up, and the last week it has certainly dribbled off and in the three weeks before that it was doing nothing.

"I don't expect any major moves out of this currency. It will just continue to dribble off," he said. Mr McKenna said the path of least resistance was well and truly down.

"Overall ...the target is now 49.70 and below that 48.00 continues to beckon.

He said the deterioration in the global outlook and particularly the Asian region was a fresh negative. - AAP

http://www.smh.com.au/news/0011/22/update/news4.html

-- Martin Thompson (mthom1927@aol.com), November 21, 2000