aust dollar down ahead of possible interest rate r

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    Aust dollar down ahead of possible interest rate rise
    AAP News
    7:12:020 2/03/2005
    SYDNEY, March 2 AAP - The Australian dollar opened slightly
    weaker today after losing further ground on news of yesterday's
    current account deficit blow out.
    Today the central bank is expected to announce Australia's first
    interest rate rise in over 12 months.
    At 0700 AEDT the currency was trading at $US0.7860/64, compared
    to yesterday's close of 0.7875/79.
    Overnight it traded in a $US0.7832 to 0.7890 range.
    ABN Amro head of foreign exchange David Mozina said the local
    unit continued to lose ground overnight after news that Australia's
    current account deficit had blown out by almost $1 billion in the
    December quarter to an adjusted $15.174 billion.
    "The Aussie was put under pressure by an appalling current
    account figure, which is now 7.1 per cent of GDP for the quarter,
    which is not too good," he said.
    Mr Mozina said all eyes are now focused on the the Reserve Bank
    of Australia (RBA), which is tipped to raise the official cash rate
    by 25 basis points to 5.5 per cent at 0930 AEDT today.
    Rates were last hiked in December 2003.
    He said the Australian dollar is likely to lose some ground
    ahead of the announcement, before the market digests the
    accompanying statement by the central bank.
    "I think it will probably be trading on the heavy side,
    (because) at these levels the Australian dollar is over-valued," he
    said.
    "Everything (then) depends on the statement.
    "The risk is that the need for further hikes after today start
    to become more watered down.
    "The market still is believing that there is going to be two
    (rate hikes) but pressures are starting to show that that is where
    the risk is going to fall."
    Mr Mozina said regardless of today's announcement, the local
    dollar was still likely to lose ground in the long term.
    "I still have a 12 month target of 72 US cents, which is quite a
    substantial fall," he said.
    The Australian Bureau of Statistics will also release fourth
    quarter GDP figures today.

    CURRENCY TABLE: Currency snapshot at 0700 AEDT
    CURRENCY SPOT PREVIOUS CLOSE
    AUD/USD 0.7860-64 0.7875-79
    AUD/JPY 82.00-06 82.25-32
    AUD/EUR 0.5962-66 0.5964-67
    AUD/NZD 1.0813-32 1.0852-70
    AUD/GBP 0.4093-95 0.4103-05
    EUR/USD 1.3182-86 1.3204-08
    USD/JPY 104.33-36 104.43-49
    EUR/JPY 137.52-57 137.88-02
    (*Closes taken at 1700 AEDT previous local session)
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