AUD back within striking distance of parity

15.49 AEST, Wednesday 13 June 2012

AUD back within striking distance of parity

By Tim Waterer (Senior Trader, CMC Markets)

The Australian Dollar is again within striking distance of parity, mostly due to traders being re-energised by stimulus hopes from the US and Europe.

Market perception over the likelihood of further monetary easing polices by the Federal Reserve will have a large say in when the AUD has another dalliance with parity. If we see a good night on US equities I would expect US Dollar buying to be kept in check on rising confidence, which would allow the AUDUSD rate to take a look at 1.0010. Support at 0.9830.

The crude oil price continues to sway in accordance with the shifting sentiment over the possibility of central bank stimulus. Any significant moves to the upside will likely be reserved until after the Greek elections, with demand concerns still clearly trumping any supply concerns in the interim.

Trading has been of a rather ‘non-committal’ fashion this week on the ASX, which has resulted in much shallower index fluctuations compared to that seen in Europe and the US. The lethargic trading performance of the index is reflective of investors wanting to sit tight knowing that a Greek election and potential market turbulence sits just around the corner.

Traders seemed unconvinced by the Tuesday rally Wall Street, with the banking stocks acting as the main drag on the index. This evening the market will again have their eyes and ears peeled for further clues over stimulus, as this seems to be what traders appear to be pinning their hopes on at this stage of proceedings.
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