AUD still can’t take a trick

15.16 AEST, Friday 17 May 2013

AUD still can’t take a trick

By Tim Waterer (Senior Trader, CMC Markets)

The Australian Dollar seemingly can’t take a trick at the moment with the latest fall today being technically driven after key stop levels were taken out. The AUD lost the best part of a cent today with the fall exacerbated by thin trading conditions as well as there being just a general lack of investors lining up to by the currency even at these subdued levels. Adding to the AUD’s woes was the fact that the greenback remained well supported despite some weaker US indicators. There seems to be a growing chorus of speculation that QE is more likely to be shortened rather than lengthened, and this is allowing the USD to remain a force de jour in the currency market.

The Australian sharemarket posted a solid, if not spectacular performance to end the week, with the ASX200 finishing in green numbers after a run of recent outs. The key mining stocks were back in favour today which supported the local index despite many commodity prices remaining unstable. Elsewhere negative news from Wesfarmers contributed to the fall in the Consumer Staples sector. However, overall the Australian market managed to rack up some gains despite a rare down night on Wall Street.

Looking ahead, US Consumer Sentiment will be closely watched and a strong reading here may add weight to the argument for QE to be tapered ahead of schedule. Financial markets remain very sensitive to US indicators given the impact that the US road to recovery will have on the Fed’s QE timeline. The reaction of the USD to any macro indicators will likely be the best barometer for assessing the future of QE, so I would expect that other assets will continue to take their cues from the direction of the greenback.
ends

© Scoop Media