Australia: The Australian Dollar is trading in very wide ranges as we write this report. The low of the day so far is USD 0.8072. It’s fall yesterday was the fastest pace since the GFC period in late 2008. The Australian stock market has been hit hard at the open today, falling more than 2% on a continuation of global jitters that saw heavy falls in Europe and the US overnight. This sets the scene for its worst weekly performance since mid-November 2008 when the S&P/ASX200 suffered a weekly decline of 8.8%. Offshore markets were hit hard during the overnight session as Europe' debt crisis caused more concern that it is indeed a contagious disease that may spread further and slow the early signs of economic recovery in the US. Looking at our AUD, rumours have abounded this morning as to whether the Reserve Bank of Australia has or will intervene to restore order to a disorderly situation. The minutes from the RBA’s meeting earlier this week, where they indicated interest rates are likely to be on hold for the foreseeable future are also weighing on AUD. The local currency has depreciated a huge 12.3% since the end of April. From here? Watch Asian equity markets for their reaction to the overnight falls in the US and Europe.
Majors: The US Dollar had a mixed night. EUR/USD has been amazing to say the very least, recording huge swings for all the reasons stated above with the Euro Zone. USD/JPY is slightly lower, while GBP/USD has falled steadily towards 1.4300. Spot gold fell for the 3 consecutive day as doubts about the strength of the global recovery, and Europe’s inability to stem its debt crisis, led to “sell off’s” in commodities. US Federal Reserve Governor Tarullo summed the current situation well when he stated “Adeeper contraction in Europe associated with sharp financial dislocations would have the potential to stall the recovery of the entire global economy..”. With the US stock market off nearly 4% last night, Paris off 2.25%, Frankfurt 2.2% and London 1.6%, we have a big day and night ahead for the currencies.