Aussie Dollar Trading

The Aussie dollar drifted lower in trading today after the US dollar found some strength. Australian government bonds closed lower after a mixed session in the U.S. Treasury market on Friday after U.S. November inflation data surprised on the downside. At 0530 GMT, the Aussie dollar was at US$0.7812, down from last weeks close of US$0.7820 late last Friday. The Aussie dollar traded at Y92.25 against the Yen, up from Y92.17. The Aussie dollar currently has an “overhang of speculative long positions and weaker metal prices” posing as negative factors according to Katie Dean, senior economist at the ANZ bank. Australian commodity export earnings in 2006-07 had a downgraded forecast which further cooled demand for the Aussie dollar. The Australian Bureau of Agricultural and Resource Economics said it expects a 13% increase in export earnings in 2006-07, down from an earlier forecast of 14%. The downgraded forecast was attributed to worsening drought conditions across most of the country which are expected to cause farm production drop by 62% in 2006-07. Peter Costello, the Australian Treasurer will release the updated budgetary and economic forecasts for 2006-07 on Wednesday (20th December 2006). Estimates point to a surplus of A$8 billion in the budget. The government had forecast a A$10.8 billion surplus in the May budget.