Forexpros – The Australian dollar edged lower against its U.S. counterpart on Wednesday, as market sentiment remained under pressure ahead of a highly anticipated European Union summit this week, amid sustained concerns over the handling of the region’s debt woes.
AUD/USD hit 1.0040 during late Asian trade, the daily low; the pair subsequently consolidated at 1.0053, edging 0.13% lower.
The pair was likely to find support at 0.9968, the low of June 25 and resistance at 1.0142, the high of May 10.
Investors remained cautious ahead of an EU summit due to begin on Thursday, amid worries the talks will not result in any effective steps to strengthen fiscal integration and allow the euro zone’s rescue funds to buy government debt.
Earlier in the week, German Chancellor Angel Merkel quashed hopes that the euro zone could issue joint euro bonds, saying the idea was “economically wrong” and “counterproductive.”
Meanwhile, the yield on Spanish 10-year government bonds was at 6.87%, nearing the critical 7% threshold, which is widely viewed as unsustainable in the long term.
Moody’s ratings agency downgraded 28 Spanish banks earlier in the week, after the country formally requested up to EUR100 billion to recapitalize its struggling banking sector.
Elsewhere, the Aussie was higher against the New Zealand dollar with AUD/NZD adding 0.10%, to hit 1.2737.
Also Wednesday, official data showed that New Zealand’s trade balance narrowed to NZD301 million in May, down from a revised NZD335 million the previous month, but slightly above expectations for a NZD300 million surplus.
The report also showed that the country’s annual trade deficit widened to NZD810 million from NZD790 million at the same time the previous year.
Later in the day, the U.S. was to publish official data on durable goods orders, as well as industry data on pending home sales and a government report on crude oil stockpiles.
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