With markets in generally ‘risk off’ mode, the Aussie was likely to come under pressure today, as the downtrend that began in late October resumed.
Newly-installed Italian PM Mario Monti might have been forgiven for hoping that markets would give him a few days’ grace before taking action, but it would seem his hopes were misplaced. Certainly, matters have not been helped by the other problem nations in the eurozone, with Greek opposition politicians saying that they will oppose new austerity measures despite agreeing to the formation of a national unity government, and the Portuguese economy showing a distinct reluctance to grow.
Australia might be the other side of the globe from Europe, but so long as investors keep buying the US dollar and Treasuries in order to find safety from the eurozone malaise, the appeal of the Aussie dollar is likely to remain limited.