By SYDNEY, Feb 3 Reuters The Australian dollar traded slightly higher on Wednesday, recovering some of the previous days losses against the greenback as improving risk sentiment supported the currency despite moves by the central bank to buy more government bonds.
The Aussie was trading 0.04 higher at 0.7610 in the afternoon, from its 0.7608 level in the previous session, amid improved market sentiment in Asia about the economic recovery prospects of countries around the world.
Weve seen a good rebound in risk sentiment after a strong rally in US shares overnight, said Steven Dooley, APAC currency strategist at Western Union Business Solutions. Asian equity markets are higher and this has been supporting the AUD.
Reserve Bank of Australia RBA Governor Philip Lowe said in a speech on Wednesday the dollar had been a factor the banks decision to hold its cash rate at 0.1 and expand its current bond buying program by another A100 billion 76.35 billion on Tuesday.
Its clear these bond purchases have helped to lower interest rates, and they have meant the Australian dollar is lower than it otherwise would have been, Lowe said in Canberra, Australias capital. So its worked.
If we were to cease bond purchase in April, its likely that there would be unwelcome upward pressure on the exchange rate.
The Aussie has solid chart support around 0.7600 and remains short of the January peak of 0.7819.
Yields on 10year paper were higher at 1.14, from 1.096 following the RBAs pledge…
