The Aussie dollar continued its ascent overnight but faced natural resistance just shy of US dollar parity. The local unit rose to highs of 99.94 US cents before retreating slightly over the later part of US trade to current levels of 99.6 US cents. It was another day, another record high against the Euro which made a clean break through 76 Euro cents to highs of 76.16 Euro cents. This theme of Euro weakness was evident against most of its major counterparts and continues to be dominated by the greenback despite moderate optimism resonating from US markets. Meanwhile, it's never been a better time to head over to the UK as the local currency continues to break records against sterling - the local unit is currently trading near post-float highs of 64.5 pence.
Locally, the day ahead brings nothing in the way of top tier economic news so we expect local and Asian equities to be the key barometer in what's like to be a quiet day of trade. From a technical perspective, there's little in the way of upside catalysts to push the local unit convincingly through resistance of 99.90/5 levels, nevertheless we do expect the local unit to remain buoyant throughout the domestic session with pockets of short term support noted down to 99 US cents. However, given we're at the tail end of 2010, it's important to remember volumes are on the decline - this in itself can pose considerable risk or reward for a currency if we should see any major market moving themes. The US economy will this week release a host of top and middle tier data which certainly has the propensity to shift price action across financial markets if we should see any significant deviation from estimates. Wednesday will see the release of 3Q Gross domestic product, personal consumption and existing house sales, while Thursday will see data on durable goods orders, personal spending/income, consumer confidence data and new home sales. At the time of writing the Aussie dollar is buying 99.8 US cents, 76.2 Euro cents and 64.5 Pence.