Australian dollar on the rise as EU debt concerns decrease

Speculation that Ireland may well be seeking financial support from the European Union has eased market cautiousness and allowed the Australian dollar to rise to a high of 99.20 US cents on Tuesday.

Reports of the extent of Ireland’s debt over the weekend and the country’s refusal to accept an EU ‘bail out’ had a knock on effect on the currency market causing the Australian dollar to close flat at the end of Monday’s trading.

However, reassurances from the Irish government that it is fully funded until well into next year and ‘in discussions’ with the EU seem to have appeased concerns. HiFX senior trader Stuart Ive acknowledged the easing of Ireland’s debt worries on Tuesday claiming that ‘it did help establish more risk being placed in the market.’

‘The main reason for the bounce overnight is there has been a little bit of a calming in the markets in terms of the whole situation with Ireland and Europe,’ Mr Ive said.

He predicted that the Australian dollar would continue to hold its position between 98.00 and 99.0 cents.

In shares, the Australian market also closed relatively higher on Tuesday with a strong performance from the finance sector. At 1615 AEDT, the SP/ASX200 index was up 0.26 percent and the broader All Ordinaries index had risen 0.2 per cent.

The materials sector however continued to under perform closing at a loss of 0.09 per cent, according to the SP/ASX200 materials index.

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