The Aussie Is Reaching for 90 cents?

The Australian markets were largely affected by the Friday?s movements in the US capital markets. The ASX and the 10-yr yield both suffered significant declines today. The Aussie on the other hand was looking rock solid, recovering its Friday?s record high position against the US dollar.The Australian media quoted economists predicting the Aussie reaching 90 cents in the short term and potentially going to parity from there.


Sydney airport lift in profits - Southern Cross Airports Corporation Holdings Ltd, the operator of Sydney Airport has posted an 11.6% increase in full year earnings. The increased passenger traffic both in international and domestic flights, up by 6.4% from the past year, was the primary driver. Other components of this financial success were success of airports? commercial initiatives such as retail and parking. New developments are planned for the coming year, such as a multi storey carpark in the International Terminal, making way for further increases in earnings. Source: The Australian,25197,22118531-643,00.html
NT overflowing with jobs - report - An independents forecaster Access Economic reports that Northern Territory?s economic growth would exceed the national rate of 3.7% in five year average. Their research results also forecast average growth of the Gross State Product in the next five years to average 4.5%. The report noted that NT?s employment growth will be 2.8% compared with national of 1.6% making it exceptionally easy to find a job there. With house prices stabilizing and construction activity picking up, the analysts see the Northern Territory leading the national economic growth in the next few years. Source: Herald Sun,21985,22119261-5012062,00.html
Uranium powwow draws political heavies - Over 400 delegates are expected to attend this year?s Australian Uranium Conference to discuss the mining and development of uranium. Australia remains the number one exporter of the nuclear fuel and the world demand for it is rising. Many developed countries see nuclear power as the best sustainable alternative source of energy that will help them cut the CO2 emissions while meeting their energy demands. However, the Australia?s NW and LJDFS territories are still banning the exploration and opening of new mines. It was noted by the media last week that BHP Billiton has already made a bet that the policy will shift in the near future and started work on new developments. Source: The Australian,25197,22116224-5005200,00.html

The Aussie recovered all of its gains from the Friday?s dip, when the carry traders have abandoned their positions following the fall of the US yields and the Dow. The strong Producer Prices that printed 1.0% over the prior 0 and beyond the expected 0.8% have contributed to the Aussie?s strength. The Australian media has revealed the opinions of leading economists that the Aussie will reach 90 cents in the short term and can potentially go for parity from there, given the rapidly weakening US dollar and bright prospects for the Australian economy. The economist also point out that such rally in Aussie would put a cap on hikes from RBA. The Aussie has reached as high as 0.8831 at the time of the report, being mostly driven by the US dollar strength/weakness throughout the Asian/Euro session.

[U][B]Stock Market
The large Friday fall of the Dow index that happened much later after the ASX closed for the weekend, carried over the weekend helping push the ASX lower. The Australian equities lost over 40 points shortly after the open, led by banks. Analysts pointed out that US-linked shares on ASX such as James Hardie Industries and National Australia Bank Ltd. dropped after the news that the US banks increased reserves for bad loans. NAB was the largest market mover with a 1.0% loss. The fall of oil did not help either and Woodside Petroleum Ltd., Australia?s second largest oil producer dropped 1.4%. The index made slight recovery later in the day, closing at 6390.4, losing 31.4 points.

[U][B]Bond Market[/B][/U]

The bond yield finally saw a large movement today after a very quiet week. It followed the drop of the US 10-yr yield, which cracked on Friday under the pressure of equity investors switching over to bonds for safe harbor. After the initial gap down the yield remained stable throughout the session, staying roughly flat and trading in a 2 bps range. It ended the day 6.6 bps lower at 6.079%