AUD retraces previous gains…

The Aussie lost some of the gains it made earlier this week as discussions on US interest rate policy because the focal point once again. After closing onshore last night around 0.7040 it managed a push higher, but ran out of support around the 0.7060 level. From here the Aussie took a gradual slide back towards 0.7000, breaking this level momentarily before establishing support again. After registering a low of 0.6992 the Aussie spent much of the remainder of offshore trading around 0.7005. This morning there has not been a lot of support so far and the Aussie has now drifted lower, trading around the 0.6990. Last night’s comments by the Fed Reserve Chairman Alan Greenspan on US interest rates was the main catalysts for market movement. With recent market discussions being around whether the Fed was reacting to slowly to growth and inflationary pressures, Greenspan stated the Fed would do “what is required”. The reaction in the market place was for a reversal of recent US Dollar selling which saw most currencies lose ground against the greenback. Within this general sell off the Aussie performed under par and our cross rates have opened a little lower than yesterday. With releases due out this morning the Aussie has the potential to rebuild support above 0.700 but this will require both pieces of data to be strong. Tonight we have US Inventory data, which will again help to see the pace of economic recovery. Any strong numbers will put further pressure on the Aussie. Today should see the Aussie trading between 0.6970 and 0.7030 depending on the figures at 11.30am. With very little interest in the Aussie onshore currently, we will have to again wait for the offshore markets to chime in.