Dollar higher on Japan economy fears

The Australian dollar is higher as the US dollar falls against all the major currencies on fears about the Japanese economy.

At 0700 AEST on Thursday, the local unit was trading at 90.02 US cents, up from 89.64 cents on Wednesday.

In overnight trade the Australian currency peaked at 90.26 US cents, its highest level since, July 30.

The US dollar fell heavily during the overnight session, hitting a seven-week low against the Japanese currency, at 74.96 Japanese yen. Resource-9

Westpac New Zealand senior market strategist Imre Speizer said the Australian dollar’s rise was mainly down to US dollar weakness.

“With the outlook for the Japanese economy in the near term not looking all that good, it caused the Nikkei stock index to fall four per cent,” he said from Auckland.

“The relationship is that when things go bad in Japan the (Japanese) money comes home and gets yanked out of America.

“That hurts the US dollar and pushes up the yen.”

Speizer said the euro got a lift from the strong German industrial production data for June that beat expectation and sparked some optimism about the European economy.

“So, you’ve got the yen climbing and the euro climbing and the US dollar weakening,” he said.

On Thursday morning, the Australian Bureau of Statistics (ABS) will release employment data for July which are expected to show that the jobless rate rose to a four-year high of 5.8 per cent.

The number of people with jobs is expected to have risen by 10,000 in July but not enough to keep up with population growth and the growth of the workforce.

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