Friday's rush for risk aversion continued in the early trading hours of this new week with the Aussie plummeting through the model's T/R level as Asian stock markets followed Wall Street's lead once again and the Nikkei recording its lowest level in 15 months. The Japanese currency meanwhile rose to an 18 month high against the USD. Further worries over more credit-related losses in US financial firms and indeed in UK banks (Barclays and HBOS) continue to pressure stock markets lower and force dealers/investors to run for cover. Gold has also eased back following its proximity last week to the record $850 level and an easing overnight in oil prices. Almost unnoticed the RBA has lifted its forecasts for underlying inflation above its comfort zone of 2 to 3 per cent. We retain a USD Negative bias but will use the discipline of the model's T/R levels and be patient and wary out there!
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