[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.
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