The Australian dollar bounced off a seven year low on Monday as opportunistic buyers bet on a burst back above US70¢ but risks remain ahead of key data from China.
Over the weekend, the dollar dived 2.4 per cent to US68.31¢, its lowest level since March 2009, after Wall Street fell more than 2 per cent on Friday, compounding the market negativity that sent global markets off to their worst start to the year on record.
In late trade on Monday the Aussie was buying US69.11¢. OANDA Asia Pacific senior technical analyst Stuart McPhee said the boost came from “opportunistic” buyers betting on a recovery back above US70¢.
“There will be limited trading from the US due to a public holiday [Martin Luther King Day], people are thinking ‘we’re going to get a 24-hour grace period here’,” he said.
The US70¢ level has proved a key pyschological barrier for foreign exchange traders. The last time the Aussie dropped below that level was in September before it clawed back, a recovery investors are now banking on.
The Australian dollar has fallen 6.2 per cent since December 31 as commodities including oil and iron ore teeter at or near multi-year lows.
Article: Vanessa Desloires
Image: Christopher Pearce