FOREX Australian Dollar Update

Rio, BP clean coal venture hits snag - A 2 billion project of developing world?s leading clean coal by collecting CO2 from air has encountered an obstacle. As two drilling attempts to find a natural reservoir by BP, international coal group, and Rio Tinto, a coal giant, failed. Source: The Australian.,20867,21882710-5005200,00.html
Rate rise Fears hit prices of metals - Global rise of interest rates puts a downward pressure on metals. Source: The Australian,20867,21882432-5005200,00.html
Prices of Copper expected to stay high for years - Copper prices that more than quadrupled in the past five years are expected to stay high, as the supply cannot catch up to the global demand. Malcolm Southwood of Goldman Sachs reports that copper will be in deficit until 2011. Source: Bloomberg
Stock Market
The Australian stock exchange is closed for the Queen’s Birthday. On Friday, ASX closed at 6241.3 and hope to reopen at a significantly lower 6231.7 pressured by the bonds. One of the most significant losers was Energy Resources of Australia, world?s leading producer of Uranium, lost 5.3%.Taking into consideration high correlation between world markets, Friday?s rebound of the Dow, and recent strong performance of Asian markets, ASX 200 should see a rise. Australian Sunday Times assures investors that the drop is not a cause of panic. Investors will have their say on Tuesday, when the market will reopen after the holiday.

Bond Market
The bond market has reached is peak since June 2004. This has had negative impact on the equities, but helped strengthen the Australian dollar that saw its 18 year high this Thursday.

While the Australians are celebrating Queen?s birthday, coupled with the projected high copper prices that should help country?s mining giants profitable, the Reserve Bank of New Zealand made an unprecedented move by direct intervention into the market (first time since 1985) by selling their currency. The market promptly responded and AUD/USD took a free fall of 40 pips over a mere half hour. We shall wait and see what response Australia will have, namely its consumers. The results of the consumer confidence survey will be printed on Tuesday.