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Risk aversion pushges the AUD lower against the GBP

Written by Sam Coxhead on November 18th, 2011.      0 comments

4:07 PM (NZT) This pair has been relatively stable for most of the week, as both currencies saw some pressure against the US dollar. Last night’s escalation is issues in the European bond markets saw the AUD placed under some further pressure that has seen it pushed to the weeks lows. It has recovered a little as the ECB came into the secondary markets and bought large amounts of Spanish and Italian bonds. Here is the interesting development. The AUD will outperform the GBP as European bond yields fall, and will underperform as they rise. How long this correlation continues remains to be seen, but at the moment the bond yields are the primary driver of risk sentiment, and therefore the AUD. .6325 (1.5810) remains the first AUD support level, a break of this would open up the way for investigations lower by the AUD (higher by the GBP).
 
The current interbank midrate is:                                                            AUDGBP .6345                               GBPAUD 1.5760
                                                               
The interbank range so far this week to date has been:                 AUDGBP .6328 - .6428                GBPAUD 1.5557 – 1.5803
 

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