Dollar Review – Eurozone uncertainty continues

The Aussie Dollar kicked off last week in the region of 1.525 to the British Pound, and around 1.0225 to the US Dollar, and has seen an interesting week.

The first knock that the Aussie endured was after a report was released by the statistics bureau detailing some 6300 job cuts in November. In addition The Reserve Bank left its target interest rate unchanged at 2.5%, and reduced their economic growth forecast. The result was a 1.1% slip for the Aussie against the US Dollar, and a retreat to the region of 1.5325 to the Pound- negating a brief mid-week strengthening of the currency.

Markets in general were skittish last week ahead of the European Summit held on the 9th. Hopes were high for a resolution to the crisis,  although EU leaders remained at loggerheads, with French President Nicolas Sarkozy labeling the talks as “extremely difficult”. The result was a decline in the Aussie andNew Zealanddollar to one-week lows as investors’ fail to be placated by the ‘step-by-step’ program suggested by German Chancellor Angela Merkel. Sudden slides in European bonds also left investors reeling. The Aussie took a hard fall to 1.55 to the Pound after the indecisive outcome was announced, and made a brief recovery to the 1.536 region.

Rob Ryan, strategist at BNP Paribas summed up current investor sentiment: “We are still a little short of cash to back up the (IMF 200 billion euro loan) agreement and until we get it, risk assets will remain vulnerable to headlines,”

AUD/ GBP: 0.6507
AUD/ EUR: 0.76161
AUD/ USD: 1.0148
AUD/ JPY: 78.86
Exchange rates as at 09:05

Composed by Jesse Crooks
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