Aussie vulnerable to commodity prices

[SYDNEY] The Australian dollar was sidelined in quiet trading on Monday after failing to hold above chart resistance and looked vulnerable to declining iron ore prices.

Undermining the Aussie was Commodity Futures Trading Commission data showing speculators had further reduced their long Aussie positions for the week to May 23 to be a net long 2,635 contracts from 6,344 the week before.

The Aussie has shed 3 US cents since March, partly due to falling commodity prices and the euro’s resurgence on upbeat economic indicators in the euro zone.

Recent kiwi strength has capped the Aussie. The Australian dollar touched a four-month lows against its kiwi neighbour earlier in the session to be last at NZ$1.0558. It dropped 2 per cent last week in the largest such decrease in more than a year.

“It’s all about the commodity plays these days and with the markets growing increasingly concerned about demand for iron ore, the Aussie could continue to struggle – more so if both the Fed and ECB point to a more hawkish shift in forward guidance,” said Stephen Innes, a senior trader at Oanda.

The Business Times via Reuters

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Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes