The US dollar found support against major rivals overnight despite the never-ending debt ceiling debacle continuing to take its toll. US equities recorded deep losses with the Dow and S&P500 falling 1.6 and 2 percent respectively. US durable goods recorded a 2.1 percent drop in June, well off expectations of a rise of 0.3 percent and the Fed's beige book suggested growth in the US has slowed.
Greece's plight to regain economic composure also remained in the headlines with a downgrade by Standard & Poor's rejuvenating fears the latest bailout may not serve to help the countries longer term fortunes. S&P downgraded Greek debt by once notch while keeping the country on negative watch. This of course found the Euro under strain after looking decidedly strong earlier in the week. We also saw German Finance Minister Wolfgang Schaeble help the Euro lower after he said the European Financial Stability Fund should not have unrestricted access to buy bonds for troubled nations in the secondary market. Price action has dropped two big figures overnight retreating from highs above $US1.45 to lows of $US1.4338.
Meanwhile the Aussie dollar built a perch above the $US1.10 level overnight with yesterday's local CPI data propelling price action to fresh post-float highs. The local unit has outperformed all of its major counterparts with the EURAUD pair at lows not seen since January. The Aussie's also outperform its commodity bloc counterparts with both the CAD and Kiwi taking a hit against the in-form A$.
We're in uncharted territory now, and while we maintain a bullish stance in the months ahead, the immediate fortunes of the Aussie will be contingent on what we see out the US and Europe which may present near-term roadblocks. Technical's suggest price action will display resistance to the $US1.1070 / 80 mark, while also building a floor overnight around $US1.10 levels. At the time of writing the Aussie dollar is buying $US1.1030.
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