The US dollar continued to come under fire overnight, losing ground against major counterparts as the G20 wrapped up their two day summit in Scotland. The latest dollar weakness came courtesy of the perceived lack of action taken by the G20 in relation to the re-balancing of global currency markets, most notably the continual decline of the greenback and Chinese Yuan. With the Yuan pegged to the falling US Dollar, by default this provides a competitive edge to Chinese exports, thus a negative influence on other economies with 'free floating' currencies. Until action is taken, currency markets remain in disarray as central banks stock up on dollar reserves to stem the negative effect of the weak greenback on respective economies. A primary advocate of the 'strong dollar' policy is European Central Bank President Jean-Claude Trichet, who has in recent times has expressed his concern on the adverse implication of excess market volatility, and has indicated it is extremely important that the U.S. dollar is strong.
A surge in US equity markets also assisted the fall in the ailing greenback, with the Dow Jones continuing its ascent reaching 52 week highs overnight, to finish up over 2 percent at 10,226.94. Despite economic indicators providing mixed signals evident in Friday's less than convincing jobs data, the market found strength in the G20's resolve to continue to prop up the economy with economic stimulus. Perhaps a good barometer to the current cautiously optimistic tone is the latest surge in the price of Gold, which remains firmly perched above $US1100.00 an ounce in overnight trade.
Meanwhile, the Aussie dollar has maintained momentum overnight, currently buying 93 US-Cents. We expect to the see the local until well supported as Australian equity markets point to a positive start, with further momentum likely given local economic indicators beating expectation. Economic data today includes a survey by the National Australia Bank which is a leading indicator of the overall health and outlook of the business sector in Australia.