Traders see good value in the Aussie, but for how long?

Market Update 

The first day of US trading wasn’t the welcome back party the greenback would have liked with US traders happy to rid themselves of the greenback at relatively good levels across the board.

Early in the domestic session yesterday the Aussie fell to a 1 month low of 0.8750 as carry trade close outs and stop losses triggered a 300 pts landslide. As the day progressed traders saw good value in the Aussie and these views were bolstered by better than expected Business Confidence figures that hit the market at 11.30am. The Japanese Prime Minister Yasuo Fukuda was reported in the Financial Times saying that the yen is “appreciating too quickly” and that “speculators need to be careful to avoid intervention”. This helped the AUDJPY to climb above 99.50 though it is still being thrown around by traders this morning. Commodities also saw a rebound with Gold up above 800 USD per ounce again.

The US Housing Market had some respite with US Pending Home Sales rising 0.2% against a -2.6% expectation with the report showing some regions making a gradual recovery. Unfortunately for the USD this was for the most part overlooked and the currency continued to depreciate. We expect a continued frenzy in the market over the next few days as we gear up for US Retail Sales out tonight and US PPI and CPI out on Thursday. TIC Net long-term transactions will also be a big one to look out for on Friday given its last result.

Trading Range

0.8890-0.8990