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Daily FX Commentary

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Daily FX Commentary

Mon, Mar 30 2009, 15:36 GMT

Investica Ltd


Risk appetite dominates Australian dollar

The Australian dollar was unable to make a fresh challenge on resistance above the 0.70 level on Friday and weakened to the 0.69 region in US trading as the US currency gained ground and Wall Street came under pressure.  The theme towards weaker risk appetite continued on Monday as Asian stock markets fell significantly and this pushed the Australian currency to lows just below the 0.68 level against the US currency.  There will be further caution ahead of the Reserve Bank interest rate meeting this month, although international trends will tend to dominate for now. 

International policy responses and co-operation will continue to be watched very closely ahead of the G20 meeting on Thursday. There will be further unease that no significant policy developments will be agreed while there will also be fears of major tensions as any serious disagreements would cause much more serious damage to market confidence.  In this environment, risk appetite is liable to weaken slightly further which would tend to benefit the dollar and yen and undermine currencies such as the Australian currency.


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Investica Ltd http://www.investica.co.uk | tim.clayton@investica.co.uk

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