Bank Fears Hurt Australian Dollar

There is potential near-term support close to 0.95 against the US dollar, but rallies are liable to be severely limited in the near term as underlying confidence in the Australian dollar falters.

The Australian dollar was unsettled in early local trading on Monday by substantial write-downs by ANZ Bank which reinforced the fears surrounding the sector following a similar move by NAB last week.

The latest economic data also recorded a decline in business confidence. The Australian currency dipped towards the 0.95 level before recovering back to 0.9550 in cautious markets. Overall confidence is liable to remain weaker in the short term and regional sentiment has deteriorated with the New Zealand dollar also under some pressure.

There will still be buying support on dips given the still favourable yield considerations with Japanese investors in particular still looking to buy on significant retreats. Nevertheless, there has been a significant erosion in sentiment which curtail support.

Investica
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