Currency Trading Commentary: March 28
After some solid gains in the previous session, global equities and commodities were softer overnight.
As such, risk currencies were also weaker.
The Aussie dollar was no exception, with our commodity based currency slipping against most of its major peers.
The AUDUSD shed 0.7% to settle at 1.0460 at this morning’s NY close, whilst the AUDJPY shed 0.3%, to 87.02.
During today’s Asian trading the Aussie and Kiwi dollars have slipped further as Asian stocks have extended the global retreat, sapping demand for higher-yielding assets.
Both the AUD and NZD are on track for their first monthly retreat this year amid concerns Chinese manufacturing is slowing.
Turning back to last night’s action, the greenback rose against the euro and the yen as US economic data indicated a strengthening recovery, undermining the case for more stimulus from the Federal Reserve.
The US dollar gained from the lowest level this month against its 17-nation European counterpart as reports showed home-prices declines slowed and consumer confidence this month stayed close to the highest level in a year.
The Dollar Index (Dixie, DXY) advanced as treasuries rose after the highest pre-auction yields since July spurred stronger-than-average demand at a government sale of $35 billion in two-year notes.
The measure had dropped the past two days amid speculation the Fed will start a third round of quantitative easing, or QE3.
Elsewhere, The Canadian loonie softened against all but two of its 16 most-traded peers as traders exited positions in higher-risk assets and Ontario, the nation’s largest province, predicted a reduced deficit next fiscal year.
The euro held near a one-month high against the greenback before a European finance ministers’ meeting this week where they are expected to agree to bolster the region’s debt-crisis firewall
Finally, the yen gained versus all of its major counterparts as investors flocked to refuge assets amid a decline in Asian equities.