The Aussie Aims at 88 Cents

The Australian dollar continued its impressive rally. Helped by the exceptionally weak US dollar, AUDUSD reached as high as 0.8784 today, clearly aiming for the 88 cents benchmark. The Australian equities did not do so well, losing across the board in various industries, while bonds gained offering the safe harbor for the investors.

[B]600 Ford workers to lose jobs in 2010[/B] - The federal Industry Minister Ian Macfarlane has confirmed that Ford?s engine plant in Geelong will be closed in 2010, shedding some 600 jobs. Commonwealth and Victorian governments have contributed $15 and $6 million respectively to an innovation and investment fund that will attract new businesses to the region. Minister Macfarlane stated that he was confident about the future situation of the Australian car industry, and is not aware of any plans by Ford to shed more jobs. Source: Herald Sun.,21985,22094131-5012062,00.html
[B]$143m offer to coal miner[/B] - Helios Australia is offering 57c per share for Comnoc Coal, which will shut down its production next year. The coal miner?s only source was a single open cut mine in the Hunter Valley. The offer presents an attractive exit strategy for Cumnock Coal shareholders, its shares jumped 26 cents or 89%to 55c on the announcement. Source: The Australian,25197,22092912-5005200,00.html
[B]Trains in crisis, but tickets could be cheaper[/B] - NSW Transport Minister John Watkins will not guarantee that the trains will run on time, but does want to make tickets cheaper. He called on the federal government to reverse the current bias in the tax system towards car drivers. The minister is proposing various tax exemptions for using public transportation to urge citizens use it. Various businesses and organizations are investigating the benefits of bulk ticket purchases for its employees. Source: Herald Sun,21985,22094146-5012062,00.html
The Aussie saw an impressive rally today aiming at 88 cents. The analysts blamed Bear Stearns Hedge Fund losses for increasing the demand for financial assets outside US, which are regarded safer. Westpac Leading Index printed at 0.2% was another postive factor in the rally. The weakness of the US dollar is also named as one of the primary drivers of the rally. The dollar index dropped below the support of 80.40, the low from December 2004, this afternoon, reaching the lowest levels since 1994. The steep decline of the ASX index might have contributed to the Aussie?s run as well, as many investors rushed to liquidate their positions.

[U][B]Stock Market[/B][/U]
After a flat day yesterday, the ASX made its move today, and the move was in the negative direction. The declining Asian markets as well as the Dow futures signaled a potential correction of global equities. The drivers of the ASX losses today were BHP Billiton, down 2.0%, Commonwealth Bank of Australia, down 0.5% and Woodside Petroleum, down 1.8%. The index lost 52.5 points overall, closing at 6329.1.

[U][B]Bond Market
The bond yield was flat today as well. Its largest move was the lower open that was driven by demand for the high yielding Australian bonds. Several analysts noted that the climate for carry trade remained favorable; hence traders have bid up the Aussie and put downwards pressure on the yield. The fall of equities is noted as another contributor to the bonds? gain.