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Australian Dollar Down As Risk Sentiment Wanes On Europe Woes

The Australian dollar lost ground against other major currencies in the Asian session on Thursday, as political deadlock in Italy and impact of Cyprus' banking woes hurt risk sentiment.

Cyprus banks will re-open today after being closed for nearly two weeks, with strict capital controls to regulate capital outflows. The government have imposed several tough controls by limiting cash withdrawals and banning cheques to avert a bank run.

Beppe Grillo's Five Star movement rejected chances of forming a coalition government with Italy's Democratic party leader Pier Luigi Bersani. Bersani must report to President Giorgio Napolitano today and asked all parties to "accept their responsibilities" and allow the formation of government.

A gauge of inflation in Australia increased 0.2 percent month-on-month in March following a flat result in February and a rise of 0.3 percent in January, a report from TD Securities and the Melbourne Institute showed today.

The inflation gauge increased 2.1 percent in twelve months to March. This was the lowest annual outcome in eight months.

Total private sector credit in Australia was up 0.2 percent on month in February, the Reserve Bank of Australia said today - unchanged from the previous month but shy of forecasts for a gain of 0.3 percent.

The aussie fell to more than a 2-week low of 1.2466 against the NZ dollar, down from Wednesday's close of 1.2490. The next downside target level for the aussie is seen at 1.24.

The Australian currency reached 1.0590 against the loonie, a level not seen since March 18. On the downside, 1.05 is seen as the next target level for the aussie.

The aussie fell to a weekly low of 1.0418 against the greenback, shedding 0.28 percent. The aussie is poised to break next downside target level around 1.04.

The Australian unit reached 98.00 against the yen, its lowest since March 25. If the aussie extends slide, 97.00 is seen as the next downside target level.

Retail sales in Japan contracted 2.3 percent on year in February, the Ministry of Economy, Trade and Industry said today, standing at 10.525 trillion yen.

That missed forecasts for a decline of 1.8 percent following the 1.1 percent fall in January.

The aussie slipped to 1.2281 against the euro, after having retreated from yesterday's multi-month high of 1.2226. The aussie may face support around 1.235 level.

In the European session, U.K. nationwide house prices for March, German retail sales for February and jobless rate for March are due.

Canada GDP for January and industrial product price index for February, U.S. GDP for the fourth quarter and weekly jobless claims for the week ended March 23 are slated for release in the American session.

by RTTNews Staff Writer

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