Aussie Dollar Slides

Another strong session for US stocks saw the Dow Jones climb another 0.6% although the Nasdaq 100 only barely managed a gain. Several of the big tech names, such as Facebook (FB), Netflix (NFLX) and Apple (AAPL) failed to rally which may have kept a lid on the index. The ASX 200 opened higher yesterday in response to strong leads from the US the night before however we failed to hold those gains as the index faded throughout the day. ASX 200 futures are up 16 points this morning.

The Aussie dollar resumed its slide, particularly in the past couple of hours, and has fallen back to US$0.742. This represents weakness in the AUD rather than strength in the US dollar as the US dollar index was close to flat for the night, currently at 94.15. The cause of the decline seems to be the announcement of a list of $200bn in additional tariffs that the US will impose on Chinese imports. As a result of the weak AUD, commodity prices, such as gold and oil, spiked higher in Aussie dollar terms.

Oil prices continue to be strong as shale production in the US has been flat for the past three weeks in a row. Inventories have also resumed declining after a period of several months of builds. Seasonally, this is a period of inventory drawdowns as gasoline demand increases for the northern hemisphere summer driving season.  

Data Releases:

-    US PPI 10:30pm AEST

This article was written by William O'Loughlin - Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via william.oloughlin@rivkin.com.au or by phoning +612 8302 3633.

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This article contains information about foreign exchange contracts, which are considered complex financial products. Please click here to read ASIC's foreign exchange trading article before considering an investment in foreign exchange contracts. 

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