Global growth fears are likely to prevent Australian dollar gains even with powerful yield support

The Australian dollar was unable to make a challenge on the 0.91 level against the US dollar on Tuesday and drifted slightly weaker in US trading. This trend continued in local trading on Wednesday with a retreat towards 0.9020.

Domestically, there was a decline in consumer confidence, maintaining the trend of weaker forward-looking indicators. Nevertheless, the Australian dollar yield support will remain strong which will provide important support, especially if there is a robust employment report.

The international risk factors will continue to be a key influence and fears over a more debilitating downturn in global growth will limit Australian dollar buying support. Overall, the currency is likely to face further selling pressure above the 0.90 level and weakened to 0.8970 in European trading as caution prevailed.