Currencies | May 06 2010
By Rudi Filapek-Vandyck
Forget about the Australian dollar reaching parity against the US dollar for the time being. Right now, it's all about global risk aversion and severe headwinds for the AUD.
Currency strategists at the National Australia Bank believe international FX traders will continue a bias to sell rallies in AUD/USD and in AUD/JPY and this should keep a lid on any advance in the near future.
To make matters worse, the technical picture has now also turned negative for the Aussie. NAB strategists highlight the fall below the 100-day moving average of 0.9079 in AUD/USD. They believe traders will now be targeting 0.9000 then 0.8800.
Apart from a seemingly less hawkish RBA, NAB suggests uncertainty over the Australian government's plans to introduce a 40% resources super profits tax also continues to weigh on the AUD.
Having said all this, the strategists state they’d be surprised if the government isn’t forced to modify its plans for a new resources tax, but for now… uncertainty rules and thus the Aussie dollar seems to have a tough task at hand to remain at present levels against the USD and the yen. As at this morning, AUD/USD is at 0.9086 and AUD/JPY is at 85.16.
