Euro Strong, Australian Dollar Question Mark

The Euro continues to strengthen as forecast, and the US dollar decline.

Expect more of this price action. The Euro may have a marginal dip of 30 to 50 points later today, but that should be about the maximum risk purely based on some short term profit taking. The dominant risk remains at all times very much to the upside however. We maintain our long held 1.50 target.

The Australian dollar on the other hand is finally feeling some of the self inflicted pain of a sluggish domestic economy due to too high for too long interest rates, and of course the pendulum swing to over taxation at precisely the wrong time. When is it ever the right time ? The Australian dollar could dip another 1-2 cents on headlines about the resources boom being over, and some miners being under pressure, but in the end China will buy more of our commodities this year, than it did last year.

Therefore the underlying fundamental premise remains the same and bullish. It is just a question of how deep a healthy correction we experience in the next few days.


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