Investing.com - The Australian dollar moved higher against the U.S. dollar Tuesday, following a downturn on Wall Street and suggestions from Germany that a solution to Europe’s ongoing debt crisis remained elusive.
AUD/USD hit 1.0203 in early Asian trade, the pair’s highest since Monday; the pair subsequently consolidated at 1.0187, adding 0.31%.
The pair was likely to find support at 0.9906, last Thursday’s low, and short-term resistance at 1.0416, the high of September 12.
On Monday, German Chancellor Angela Merkel’s spokesman Steffen Seibert dashed market hopes for an imminent solution to Europe’s two-year old debt crisis, saying Merkel had made it clear that, “dreams are taking hold now with this package, everything will be solved and everything will be over on Monday won’t be fulfilled.”
The process for an end to the crisis, “surely extends well into next year,” Seibert said at a news briefing from Berlin.
Over the weekend, the Group of 20 finance ministers and central bankers wrapped up talks in Paris, proposing a scheme to ward off Greek default, strengthen regional financial institutions and halt the spread of debt contagion.
European officials set an October 23 deadline for action at their scheduled meeting in Brussels, Belgium.
Australia’s Treasurer, Wayne Swan, on Monday urged European leaders to adhere to pledges made to Group of 20 officials to prevent the further spread of financial threats in the euro-zone.
“I’m now confident that my European colleagues understand the seriousness of the threat and that they need to speak with one voice,” Swan said in London after attending G-20 talks in Paris over the weekend.
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“Most crucially, they need to deliver at their meetings this coming weekend,” Swan added.
On Wall Street, shares suffered from Merkel’s assessment of European debt, with the Dow Jones Industrial Average falling 2.13%, the Nasdaq Composite Index lost 1.98%, and the S&P 500 surrendered 1.94%.
In Sydney, Australian shares moved lower in early Tuesday trade, with the benchmark S&P/ASX 200 dropping 1.65% to 4,205.50.
Meanwhile, the Australian dollar was higher against both the euro and the Japanese yen, with EUR/AUD falling 0.13% to hit 1.3507, and AUD/JPY up 0.36% to hit 78.29.
The Reserve Bank of Australia was scheduled to release minutes from its October 4 meeting, when it voted to leave interest rates untouched at 4.75%, later Tuesday.