The Australian dollar continues to value more than the US one. AUD/USD dropped to the parity line but manged to hold on, as the global mood remained sour.
News from Europe continue to be the main market mover, with the Aussie moving in a similar way to the euro. Will it push the pair over the cliff?
Long EU Summit
The EU Summit may agree on a “growth pact” worth 120-130 billion euros. This needed move amounts to only 1% of GDP, but is a positive first step.
However, Italy and Spain may be the finalists in the Euro 2012 Football tournament, but their bonds aren’t doing that well: they remain at unsustainable levels. Both countries begged for help from the European Central Bank, but were denied. The bailout funds, either the EFSF or the ESM, might buy bonds, but this seems too little, too late.
Given the history of previous summits, and the big differences between Germany and all the rest, the disappointment wasn’t too surprising.
Currently, it seems that Italy still insists on euro-bonds, or debt sharing – something that Germany categorically opposes. This could ruin the little achievements.
AUD/USD
The Aussie fell from the critical 1.0230 line last week. This was strong support before the collapse, and proved to be strong resistance. Another move up failed to reach this line.
Aussie/dollar support worked as perfect support once again. If this level breaks, the pair could stumble to 0.98 or lower.
For more, see the AUDUSD forecast.
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