After a solid start to offshore trading which saw the Aussie rise to highs of 90.7 US cents, the local unit took a turn for the worst as investors flocked to the perceived safety of the greenback on the back of less than convincing consumer confidence figures. As European markets kicked off, the Aussie started an upward trajectory with a helping hand from RBA Deputy Governor Ric Battellino who painted a bullish view of future economic conditions, with a particular focus on emerging economies need for Australia's resources. Mr. Battellino also pointed out the inflationary risk associated with the current mining boom, but suggested the floating exchange rate of the Aussie currency would assist in combating such risks.
Things turned sour as US Consumer Confidence showed a surprise fall to record a reading of 46 in February against a previous result of 56.5. Economists had forecast a result of a much smaller dip to 54.6. This sent shock waves through equity markets, translating to a risk fueled switch to the greenback. The US dollar index which measures the dollar's value relative to six major foreign currencies is currently trading up 0.52 percent at 80.93. As a result, the Aussie slipped two big figures to lows of 88.7 US cents but has since regained some composure to current levels of 89.2 US cents.
Local economic feedback today includes the Conference Board Australia Leading Index and the Wage Price Index; however we expect this data to have little impact, with the Aussie dollar likely to be influenced by local equity market moves.