Oct. 19 (Bloomberg) -- Nomura Holdings Inc. recommended that investors sell the Australian dollar versus its U.S. counterpart because global risks are “skewing to the downside” before this weekend’s European Union summit.
Nomura sold $20 million of Australian dollars at $1.0325, expecting the currency to weaken to 98 cents, Geoff Kendrick, head of European currency strategy at Nomura International in London, wrote in a note to clients today. The firm added a so- called stop-loss order at $1.0450 in case the currency appreciates. Kendrick wasn’t available to comment.
“As we approach this weekend’s key EU council meeting, we think the time is right to enter fresh short risk positions,” Kendrick wrote. “Longer term we remain structurally bullish on the Australian dollar versus the U.S. dollar, but think that the European concerns will dominate in the nearer term.”
The Australian dollar appreciated 6.4 percent this month against the greenback, outperforming all of its 16 major counterparts except for the Brazilian real, on optimism European leaders will forge a rescue plan to contain the region’s debt crisis.
Australia’s dollar climbed 0.2 percent to $1.0278 at 12:29 p.m. in New York, after earlier falling as much as 0.3 percent.
--Editors: Dave Liedtka, Greg Storey
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