The Australian dollar pushed to highs just above the 0.85 level against the US dollar on Tuesday before retreating to 0.8470. The correction weaker gathered pace in local trading on Wednesday with a move to lows around 0.8410 and losses extended to just below 0.84 in Europe.
There were no significant domestic releases with global trends tending to dominate. The currency was undermined by a drop in commodity prices and the weaker trend for global stock markets which reduced demand for the Australian dollar. The currency will be vulnerable to further selling pressure if there is a sustained increase in risk aversion and a move away from high-yield instruments. There will be the potential for a limited Australian bounce from around the 0.84 level, but the underlying correction weaker is liable to be more extensive over the next few days.
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