Aussie Heading for a Retest of Highs?

Ahead of the weekend the markets in Australia have been rather quiet, reflecting the public?s relaxed Friday mood, and lack of any meaningful economic news. Strong commodities and oil prices have boosted the performance of the stock market, while bonds yields once again rose in anticipation of further rate hikes.

Macquarie?s Masters Says Australian Dollar Story Still Strong - Joanne Masters, a currency strategist at Macquarie Bank, Sydney, acknowledged the weekly decline of Aussie after Stevens? neutral speech yesterday. However, she believes that at 6.25% the rate is still pretty high, and the Australian currency is still strong, but relying heavily on the US data. Source: Bloomberg
Dollar weaker at noon - Aussie was trading lower as of noon AEST at 0.8370, down from yesterday?s close of 0.8376. With no major events taking place this weekend, save for the US CPI (Consumer Price Index) that is anticipated not to move the market significantly, Aussie is expected to hold its ground for the next few days. Source: Herald Sun,21985,21910292-5012062,00.html
All’s well that ends well: Santos to bury carbon dioxide - Santos, Australia?s major oil and gas exploration and production company, has revealed plans to build a CO2 storing facility in the South Australian outback. The carbon dioxide will be stored in empty underground oil and gas wells. The Moomba Carbon Storage project has an estimated cost of $714 million, was discussed with the Government already. The storage is expected to hold up to 400 million tones of CO2 from polluters along the East cost and the first demonstration plant on the facility running by 2010. Source: The Australian.,20867,21907352-5005200,00.html
Woolies appeals Warehouse ban - Analysts say that an appeal by Woolworths against rejection of a takeover bid for the New Zealand?s The Warehouse Group has a good chance of success. Source: Herald Sun
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Aussie today saw little follow through from yesterday?s speech of RBA?s Glenn Stevens, then found support and headed for slight retrace, trading in the range of 0.8364 - 0.8375. The lack of news, Bank of Japan?s decision to keep rates the same and the US bonds seeing no major fluctuations all contributed to a very stable situation for the AUD/USD pair. Looking back at Australia?s strong economic data and recent 17 year high for the Aussie, it is tempting to think that it has got the potential to keep moving higher especially in light of the fact that Bank of Japan has remained stationery, making Aussie attractive for carry traders.

Stock Market
Record high oil price caused by the slow productivity of the US refineries, helped the oil giant Santos gain 2.4%. Increased copper price boosted the performance of BHP, which consistently was a primary driver for ASX moves, was in the lead again. ASX moved a total of 32.5 points to 6293.8. The ASX futures contracts added 0.4% to 6291, reflecting market?s optimist for the uptrend to continue.

Bond Market
The bond market regained its confidence, rose to the pre-RBA conference level and stayed there for the remainder of the day. With little movement in the US bond market, no major shocks are anticipated.