Despite an overall positive result in US equity markets last week, the general nervous disposition seen throughout the week translated to losses on Friday with the Dow and key commodities finishing in the red, resulting in another bout of risk aversion which pushed the greenback back up against major counterparts.

The US dollar index which measures the dollar's value relative to six major foreign currencies rose 0.39% to close at a level of 75.58. Higher yielding currencies bore the brunt of the losses on Friday with the Aussie falling to lows of .9060 US-Cents after seeing highs of .9215 US-Cents in the domestic session. At the time of writing the Aussie dollar is slightly weaker buying.9140 US-Cents, however we expect to see moderate support in the domestic session. The overall trend is still long; with the market majority still seeing Dollar parity on the horizon and investors are still bullish on subsequent interest rate hikes, this should see the Aussie Dollar well supported coming into Christmas.

The second part to the equation for upward momentum is of course highly contingent on movements on the US Dollar. As the US economy continues to show mixed signals investors continue to flock to the low yielding greenback in times of uncertainty, evident in last week's surge on the back of less than convincing housing data. 

Last Wednesday saw Housing Starts show a surprise decline in October, falling more than 10 percent to an annual figure of 529,000. This was well below the 600,000 expected by economist, attributed to the tax credit expiry. We also saw building permits suggest future construction is slowing with the data showing a decline to 552,000 against 575,000 last month, giving further weight to the fed's stance to keep interest rates at records low for an extended period.  However the bane on the economy still remains with record unemployment, which hit a 26 year high of 10.2 per cent in October.  In his recent Asian tour, President Obama indicated a rise in US exports will be the key to combating the dire unemployment situation in the states, perhaps an indication toward continued tolerance of a weak US Dollar, which by default give the US exports a competitive edge.