Australian Dollar Outlook 08/03/2011
Australia: Risk aversion trading hit the AUD overnight as unrest in the Middle East weighed on the local currency Monday night. After touching a high of USD1.0185 earlier on the in the overnight session, the AUD was soon sold off along with commodity prices. The AUD had a mixed session against the crosses, AUD/NZD touched a new 19-year high just shy of NZD1.3800. Another factor weighing on the currency overnight was Moody's downgrade of Greece's credit rate by three notches to B1 from Ba1. It also warned that it may cut it again if the government's commitments to austerity wanes or international creditors become less willing to support it. There is no major data being released in Australia today so markets are likely to trade sideways with any dips likely to be supported by keen exporter interest.
Majors: It was a mixed session Monday night with the EUR hitting a 4-month high of $1.4020, pushed higher by interest rate hike expectations. Anti-government clashes in Libya also provided to the uncertainty in overnight trade, with oil and gold both rising overnight. Oil prices hit a 29-month high before retreating later on the session. Gold was similar to oil, rising steadily earlier on in the session before later retracing. Spot gold ended 0.4% higher at USD1436 per ounce. US equities were lower, falling on the back of continuing violence in Libya and concerns about the higher oil price dampening global economic growth. Talk of higher energy prices in the US prompted more talk of further quantitative easing, while in Europe, ECB President Trichet reiterated his hawkish comments about inflation which shocked markets earlier last week.
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