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Forex - AUD/USD slides as risk aversion sharpens

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Forexpros - The Australian dollar was down against its U.S. counterpart for a second day on Wednesday, as risk aversion sharpened after a summit meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel failed to produce a resolution to the region's ongoing debt crisis.

AUD/USD hit 1.0432 during late Asian trade, a daily low; the pair subsequently consolidated at 1.0463, shedding 0.21%.

The pair was likely to find support at 1.0350, the low of August 15 and resistance at 1.0526, the high of August 5.

German Chancellor Angela Merkel and French President Nicolas Sarkozy proposed a new council to improve the governance of the euro zone and planned to introduce a financial transaction tax in September.

But the two leaders fell short of increasing the region's bailout fund, which many feel is inadequate should the debt crisis spread to Italy, Spain or France.

They also rejected issuing euro bonds, saying that the bonds will not solve the single currency bloc's debt issues, disappointing investors who had been anticipating such an action.

Meanwhile, official data released earlier showed that Australia's wage price index rose 0.9% in the second quarter, broadly in line with market expectations.

Separately, the Melbourne Institute's leading index, which indicates the likely pace of economic activity three to nine months into the future, edged up 0.1% in June.

Elsewhere, the Aussie was also down against the yen, with AUD/JPY slumping 0.44% to hit 80.17.

Later in the day, the U.S. was to publish official data on producer price inflation, as well as government data on crude oil stockpiles.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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