The 'Dubai Jitters' continued to plague world markets on Friday as investors digested the news of a potential default of Government owned companies in Dubai. In a thinly traded half-day trading session due to Thanksgiving holidays, US stocks spiralled with all the DOW constituents finishing in the red to lose over 1.5 percent on the day.
As key commodities lost ground, traders returned to the perceived 'safety' of the US Dollar at the expense of higher yielding currencies. Following on from Friday's domestic session the Aussie Dollar continued its decent, as global investors evaluated the potential fallout from the once robust economy of Dubai and the effect on respective economies. Through European and US trading the Aussie dollar was pulled to lows of 89.46 US Cents before regaining some composure to finish the session at 90.75 US Cents. True to form, the price of Gold proved to be highly reactive to the in-favour greenback, falling to lows of US$1137 an ounce before staging a comeback to close the session at US$1177 an ounce.
The weekend brought positive news with The United Arab Emirates' central bank vowing to stand behind the countries banking system, in addition to news the U.A.E capital Abu Dhabi will step in and support the cause. This should prove to be the stabilising factor for local markets today with Aussie index futures pointing to a positive start, by default providing support to the Aussie Dollar which has re-surfaced above 91 US Cents in early trade. Key economic releases today include New Home Sales for the month of October and Company Gross Operating Profits which is expected to rise 0.1 percent for the quarter.
Bank of Japan Governor Masaaki Shirakawa will also speak today with the topic of excessive currency movements likely to be addressed. As the Japanese Yen continues to strengthen against the greenback despite Japanese officials warned of excessive movements in the currency markets may hamper Japans export fuelled recovery. As the Yen makes ground against major counterparts, japans exports become less price-competitive against competing economies fuelling speculation the central bank may need to intervene for the first time since 2004.