2009.01.0523:23:00UTC+00Aussie Recovers From 4-day Low Against Canadian Dollar

The Australian dollar that declined against its major counterparts in early Tuesday Asian trading reversed direction shortly. The aussie thus recovered from a 4-day low against the Canadian dollar.

The Australian stock market was trading higher today, led by banking stocks, while energy stocks advanced on higher oil prices. At 7.26 P.M. ET, the benchmark S&P/ASX 200 Index was advancing 71.30 points, or 1.93%, to 3,758.30 and the broader All Ordinaries Index was gaining 64.00 points, or 1.76%, to 3,702.90.

On the economic front, activity in Australia's services sector contracted for the ninth consecutive month in December, according to a report published today by the Australian Industry Group and Commonwealth Bank. The group's Performance of Services Index, or PSI, increased 1.5 points from November to a reading of 39.3. Index readings below 50.0 indicate a contraction of activity in the measured sector.

The Aussie slipped to a 4-day low of 0.8466 against the Canadian dollar before bouncing back at 8:00 pm ET Monday. The aussie-loonie pair that closed yesterday's trading at 0.8518 is presently quoted at 0.8540.

Against the currencies of US and Japan, the Aussie weakened to 0.7109 and 66.24 by about 8:05 pm ET Monday. Thereafter, the aussie gained ground and it is now worth 0.7151 against the greenback and 66.70 against the yen, compared to yesterday's close of 0.7161 and 66.85, respectively.

Japan's monetary base was up 1.8 percent on year in December, the Bank of Japan said today. That follows a 1.9 percent annual increase in November to 88.85 trillion yen. For the fourth quarter of 2008, the monetary base gained 1.7 percent on year. For all of 2008, the monetary base added an annual 0.1 percent.

The Aussie advanced against the European currency after falling to 1.9128 at 7:25 pm ET Monday. Currently, the euro-aussie pair is trading at 1.9031, compared to 1.9046 hit late New York yesterday.

Traders now await the European session, in which the Euro-zone CPI, French consumer confidence indicator and the services PMI reports from Germany, France, Italy and the Euro-zone-all for the month of December have been slated for release.

Across the Atlantic, the Canadian industrial product price and the US factory orders, pending home sales and the ISM non-manufacturing reports are expected to influence trading in the New York session.

The Federal Reserve is scheduled to release the minutes of its December 16th meeting at 2 pm ET today.

While announcing an interest rate cut in the range of 0%-0.25% at its December meeting, the FOMC noted that the outlook for economic activity has weakened further, with a deterioration in labor market conditions, a decline in consumer spending, business investment and industrial production and tighter credit market conditions. The Committee acknowledged the diminishing of inflationary pressures and also expressed its view that inflation will moderate further in coming quarters in light of the slowing economic growth.

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