Business Day 13/5/2013 – Thomas Averill

Tide turns for the dollar

The Australian dollar is tipped to remain under pressure against the US dollar as the greenback continues to strengthen.

The dollar was at US99.90¢ in late local trade, following a rollercoaster ride last week that saw it tumble nearly 3 per cent after a rate cut by the Reserve Bank and as the US dollar soared against the Japanese yen and other currencies.

It’s always been the case that at the point when the US dollar found some significant strength, that was going to be the pre-condition for the Australian dollar falling

The Australian dollar slipped below parity against the greenback early on Saturday morning local time for the first time in 11 months, touching a low of US99.61¢.

Currency strategists said the Australian dollar could continue to remain under pressure early this week.

”We’ve got Chinese retail sales out today. If that’s another disappointing piece of news out of China, then that might be another trigger point for a further sell-off [in the Australian dollar],” said Rochford Capital currency strategist Thomas Averill.

”We see the dollar trading down to US98.5¢ to US98.7¢ in the next few days. But then we do expect it to get support. The broader risk environment isn’t too bad. Equity markets are still relatively supported.”

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