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Dollar lower amid Europe fears


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The Australian dollar is slightly lower after weak German economic data weighed on market confidence.

Early on Tuesday, the local unit was trading at 88.05 US cents, down from 88.16 cents on Monday.

Caution crept into markets after the IFO index of German business confidence fell for the sixth month in a row to a near two-year low in October – a gloomy sign for the struggling European economy.

BK Asset Management managing director Boris Schlossberg said financial markets had started the week in a cautious mood.

“Currencies were relatively placid on the first trading day of the week despite a flurry of news over the weekend following the release of the European Central Bank stress tests for the banks,” he said.

“IFO chief economist Wohlrabe noted that there were almost no bright spots in the German economy now.”

Less than one in five euro zone banks failed a financial stress test aimed at preventing a repeat of the global financial crisis, the ECB said.

The main focus for markets this week will be an announcement early on Thursday morning, Australian time, by the US Federal Reserve after its two-day policy meeting.

Traders will be looking for any clues on the timing of a Fed’s interest rate hike, which is expect some time in 2015.

On the stock market, ANZ shares resumed trading today after a trading halt late Monday.

ANZ says “an abundance of caution” led it to request a stop to trading of its shares after the bank accidentally published its own profit data on its website.

It later revealed it had late last week inadvertently published on its website unaudited data showing percentage movements in its cash profit for the second half of its fiscal year.

The numbers were contained in a template of its financial tables intended to assist analysts preparing for the bank’s full year financial results presentations on Friday.

ANZ said the release of the figures did not constitute a breach of its continuous disclosure obligations, but it sought the trading halt “out of an abundance of caution”.

Trading halts are typically requested to ensure all investors are equally informed before trading in a stock.

The shares, which had gained 32 cents, or one per cent, to $33.34 before the halt commenced, will resume trade as normal on Tuesday.

In data released today, Australians are becoming more upbeat about the economy as worries about the federal budget fade and the sharemarket rallies.

The ANZ/Roy Morgan consumer confidence index rose 2.7 per cent last week, hitting its highest level in 12 weeks.

Expectations about the economic outlook had a 10 per cent bounce after being at subdued levels following the harsh federal budget in May.

ANZ chief economist Warren Hogan said the lift in consumer confidence combined with a rise in non-mining business investment were good signs for the economy.

“However, consumer confidence clearly remains fragile and we will continue to monitor confidence closely for an early-read on consumption into the fourth quarter of the year,” he said.

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