Australian Dollar succumbs to pressure

15.14 AEST, Tuesday 9 July 2013

Australian Dollar succumbs to pressure

By Betty Lam (Sales Trader, CMC Markets)

The good vibes from the commencement of Wall Street’s second quarter reporting season has continued to spread its cheer. The Nikkei is back on track to shaking off yesterday’s losses, with Tokyo-based stocks tracking gains for most of the trading session. In contrast, not all Asian markets are feeling the love with Chinese equities bouncing between green and red today, fuelled by mixed pricing and inflation data.

Spurred along by a solid Wall Street performance, Australian stocks opened in fine fashion, chalking up nearly 50 points in the first 10 minutes of clocking in. This early session revival recouped most of yesterday’s trading losses. Local traders digested NAB’s business confidence numbers which descended to a four year low last month. The market had little reaction to this, with the ASX200 remaining fairly static at the release.

Aussie equities were boosted by enthusiastic China price data also offered up before lunch. China’s Consumer Price Index returned better than expected for the month of June. The China-market-love rippled through most Aussie market sectors, driving up materials and big banks in a big way. The afternoon session has been steadily trading upwards, potentially sealing the ASX200’s fate in the green at the kill.

Meanwhile, the local currency has experienced intra-day volatility taking on a half cent drop in early trading. Thanks to a constant offering of positive indicators out from the US suggesting a strengthening economy, the AUD continues to succumb to downward pressure. Further dollar free fall was triggered by NAB’s weak business confidence data, the Aussie dollar index flirted wildly with the US0.90c mark, settling for today’s low of US0.908c. After the dip, the AUD has dried itself off and is currently exchanging hands back in the US0.91c range.

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