LONDON: The Australian dollar hit a four-year low against its US counterpart on Wednesday ahead of a clutch of data likely to prove crucial for the immediate prospects of a handful of other currencies against the greenback.
The euro, up almost a cent against the dollar this week, dipped briefly after a senior European Central Bank official pointed explicitly to the chances of it opting for outright purchases of government bonds in the first quarter of next year.
The Aussie has been one of the biggest sufferers during the dollar's rally since July and Reserve Bank of Australia (RBA) Deputy Governor Philip Lowe propelled it to $0.8514 on Tuesday by saying it was still overvalued.
Dealers said investors in Europe had continued to sell the currency in early trades, pushing it to a low of $0.8499 and below support at around 109.0 New Zealand dollars above which it had held since August.
"There are those who say the Aussie should bounce from these levels but my feeling is, if it breaks below this support against the kiwi, that may be significant," said Daragh Maher, a strategist with HSBC in London.
Traders said US numbers on jobs, consumer sentiment and durable goods orders around lunchtime on Wednesday would test the strength of a slight recovery for the euro after European Central Bank Governor Mario Draghi last week sank the common currency to less than $1.24, its lowest in more than two years.
After the comments by ECB Vice President Vitor Constancio on Wednesday, the euro slipped to a day's low of $1.2454 before recovering to $1.2466, down 0.1 percent on the day.
"It may be an interesting test for the euro today," HSBC's Maher said.
"My feeling is the market would like to sell this week's little rally but for that to happen I think we would need to see some decent data out of the United States." Undermining the US currency, the yield on benchmark 10-year US Treasury notes fell after a solid 5-year sale on Tuesday as well as month-end buying.
It was last at 2.245 percent, down from a US close of 2.261 percent.
"Some USD longs could be getting a little nervous into year-end," said Michael Turner, a strategist with RBC Capital Markets. "Today's data are not exactly top-shelf, with the possible exception of durables, but the sum of the parts adds up to an interesting afternoon for data watching."
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