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The wool market finished 1.5 per cent higher last week as the Eastern Market Indicator closed at 1,224 cents/kg, gaining 9c/kg.

AWEX said the market was firm from the outset, aided by a falling Australian dollar which was affected by the Reserve Bank cutting official interest rate on Tuesday.

The Australian currency was trading around just under $US1.04 on Wednesday and fell to $US1.025 on Thursday.

The EMI fell by US21c/kg over the week, according to The National Council of Wool Selling Brokers of Australia executive director Chris Wilcox.

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"Given the uncertainty on the macro-economic front, it is hard to see anything but a volatile period ahead for the wool market," Mr Wilcox said.

He said there had been some knock-on effects from the EU sovereign debt crisis which had the potential to affect trading in wool.

"This includes fluctuations in the $A exchange rate and the financial services and futures market."

He said an example was the announcement on Tuesday that administrators had been appointed to MF Global Australia as a result of its bankrupt parent company, US-based MF Global, going into liquidation because of losses incurred on EU sovereign debt.

"I understand that MF Global Australia provides financial services to some companies in the Australian wool market," he said.

There was a large gain in the Western Indicator of 35c/kg which was contributed to Fremantle having only one-day sales.

The Landmark Wool Weekly report said the largest gains in WA last week were at the fine end, with some 18 micron categories rising by 65c/kg, while the prices rose up to 55c/kg in the broader end.

This week's wool market currently has 42,913 bales rostered for sale with estimates for the following two sales at 43,580 and 47,900 bales respectively.

Australian Wool Industries Secretariat Peter Morgan said these figures showed an 18 per cent decrease over the three-sale period when compared with last year.

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