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10 Second Summary
Expect support of 63USc to be tested for the AUD and 64USc for the Kiwi today as the world looks for the result of the latest bailout of the US auto industry. The near term outlook for our local currencies is dim as global turmoil increases.
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Australian Dollar
The AUD looks set to head for support at 6300 this morning after last nights dovish comments by Australia’s Central Bank and another killer sell-off on Wall Street. Another bout of RBA intervention could be on the cards as we have recently seen them act at the 6350 level. The Aussie dollar has been the worst performing major currency since June this year, analysts are expecting the AUD to rally next year as we recover, where as Europe, Japan and the US will continue to contract.
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United States Dollar
Fears about the future of the US big 3 automakers General Motors, Ford and Chrysler helped drag the DOW down 400 points or 5%. The industry is seeking a $25 billion dollar corporate bail out package to avoid a series of major business failures that could leave tens of thousand’s of jobs lost. With concerns that an increasing deterioration in the US economy is wide spread, this will keep a lid on any advancements of our local currencies for the time being.
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Euro
Following another negative close for the DOW, the Euro dipped once more against the greenback, dragging the Aussie and Kiwi with it. Risk Aversion Rules! Once again, investors deserted trades in higher yielding assets in favour of the relative safety of the USD. A familiar trend of late, ensuring the Australasian currencies remain trapped in recent ranges.
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Japanese Yen
The JPY had gains across the board overnight as the Fed minutes projected a 2009 growth rate in the US of -0.2% to 1.1% and unemployment rising between 7.1% to 7.6%. This mixed with headlines that the equity markets have not reacted as sharply but banks and commodity stocks are lower. Japanese Oct trade balance due out today will be watched by investors for further direction.
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New Zealand Dollar
Still struggling to combat the risk aversion virus, the Kiwi lost ground to most major currencies overnight and continues to be range bound ahead of a raft of off-shore data due for release in the latter part of this week. With the first cricket test due to "kick-off" today in Brisbane, the NZ Black Caps will fancy their chances against the Aussie's, still smarting from their recent Indian defeats. However, we all know how difficult they will be on home soil, especially with some reputations to restore. As with the currencies, volatility is guaranteed!
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