Once again, talk last week focused on currency with the Australian Dollar falling to a low of USD0.9354 before staging a massive 2½ cent rally on Thursday night to close the week unchanged. On balance however, the currency’s performance so far in the June quarter (down 8% against the USD and the Trade Weighted Index down 10% from its April peak) in the face of US Federal Reserve’s tapering expectations takes some pressure off the RBA to cut rates soon.
Internationally, all eyes will be on the US Federal Reserve’s policy meeting this week for any guidance on the expected timeline for the tapering of its bond-buying program. The global market will wait for US Federal Reserve Chairman, Mr Bernanke to advise the world from Washington on Wednesday night that the proposed tapering of the Fed’s stimulus package is not tightening and that the eventual end of quantitative easing is not the precursor for higher rates.
After a solid 2% rally last Friday, our local equity market is set for another weak opening today after the US share market shed 94 points or 0.7% over the weekend, following softer than expected consumer confidence data.