Forex Trading Log

The Australian dollar closed the Asian forex trading day stronger today brought about by gains in local and regional stockmarkets as well as economic data released today. The Australian economy grew by 1.0 percent in the fourth quarter, lifting on year growth to 2.8 percent from 2.2 percent in the third quarter. Strong spending, construction and mining activity gave the economy a boost. Growth was expected by the market to be 0.6 percent.

The Aussie dollar is steady for now. Australia’s monthly trade deficit in January has narrowed which encouraged the local currency somewhat. The deficit narrowed to A$876 million in January from a gap of A$1.379 billion in December. The Australian Bureau of Statistics (ABS) said that exports rose by 2 percent and imports fell by 1 percent in the month. The Reserve Bank of Australia (RBA) met earlier this morning but the market expects them to hold rates steady at 6.25 percent. The outcome of their meeting will be found out tomorrow.

While the Australian dollar has drifted lower in forex trade today, selling pressures across worldwide markets have eased. Government bond prices have closed higher after the economic data out of US of a downgrade in US fourth quarter GDP (Gross Domestic Product). In local data there was an upbeat fourth quarter capital investment data where business investment lifted just 1.0 percent (seasonally-adjusted) in the fourth quarter from the third, the data included news of a sharp upward revision of expected mining sector investment through 2007-08.

Looks like the Australian dollar is stuck in range trading mode for the moment. The support for the Aussie dollar is largely believed to be from the possible further rate rises. The RBA Governor Glenn Stevens warned last week that it was “too soon to declare victory” over inflation, adding that cutting of interest rates hasn’t been recently considered. Remember that the Australian official interest rates were raised three times in 2006.

I haven’t been in Australia for the past month, and it’s time to review the forex charts to check out what’s been happening to my beloved AUD/USD currency pair over the past month. Yes, the holiday was GREAT. And Yes, I did keep up to speed of what the Australian dollar has been doing over the past month. How? By checking out local papers and Bloomberg!

The Australian dollar has finished the final trading day of 2006 on a high note. The Aussie held onto a the recently broken resistance level of 79 US cents today even with a thinly traded market which lacked momentum. “There is demand for the Aussie out there but it feels like month, quarter or year-end demand rather than genuine demand,” said Robert Rennie, currency strategist at Westpac Bank in Sydney. The Australian dollar hit a high of US$0.7915 in New York trade with the aussie maintaining its strength in the New York session.

The Australian dollar is the official currency of the Commonwealth of Australia since 1966. The currency is commonly abbreviated with the dollar sign “$”. Other notations used to distinguish the Australian dollar from other currencies are $A or A$, $AU or AU$ and its official ISO currency code is AUD. To locals and currency traders the currency is commonly referred to as simply “the Aussie” or “the Aussie Dollar“.

The Aussie dollar traded firmer today (Wednesday) after favourable crossrates against the Japanese yen. However, Aussie trade was stagnant with little stimulus from local or offshore data. The Aussie dollar has recovered from its recent lows of just below 78 cents and low it lies around 78.41 US cents. The Aussie was up to Y92.59 from 92.06 yesterday. US Treasurys initially fell in response to U.S. November producer price index (PPI) data and a report on housing starts but recovered in the afternoon, closing unchanged.

The Australian dollar recovered somewhat from a daily dip down to US$0.7775 in New York trade and the currency is now hovering above 78 cents. Local economic news is scarce around this time of the year – more major economic news are coming in the new year. Australian Government bonds ended slightly firmer, moving away from their year lows. A quiet U.S. Treasurys market yesterday meant few leads were on offer for local traders. Interest is focused on the release later today for the US November producer price index (PPI) data and a report on housing starts data.

The Aussie dollar drifted lower in trading today after the US dollar found some strength. Australian government bonds closed lower after a mixed session in the U.S. Treasury market on Friday after U.S. November inflation data surprised on the downside. At 0530 GMT, the Aussie dollar was at US$0.7812, down from last weeks close of US$0.7820 late last Friday. The Aussie dollar traded at Y92.25 against the Yen, up from Y92.17.