Indecision In Global Share Markets Holds Back The Australian And New Zealand Dollars

Modified: Tuesday, 20 March 2012 09:55 BST - Written by Frank Davies

STORY LINK Indecision In Global Share Markets Holds Back The Australian And New Zealand Dollars

It was a case of mixed messages for global markets during yesterday’s session – London’s FTSE 100 share index closed slightly down on the day, while Paris’s Cac 40 suffered more significant losses and US share indices spent most of the day trading into positive territory.

This indecision for equities markets fed into the currency markets – the Australian and New Zealand Dollars remained out of favour, as institutional investors were reluctant to commit to investments with a high risk tariff, but at the same time, the US Dollar lost ground against the Pound, with the GBP USD exchange rate touching an intra-day high of 1.5914 .

The Greenback did, however make some gains against the euro, sending the EUR USD exchange rate down to 1.3142 on the day.

So for much of the session, Sterling traded up against the high yielders and the safe-haven US Dollar. This suggests that investors are less convinced about the US Treasury Bill’s safe haven properties than they previously were. This weakening of the Greenback’s safe haven appeal may well have been triggered by Friday afternoon’s weaker than anticipated US Industrial Orders numbers, which showed no increase from the previous month’s corresponding numbers.

Meanwhile, Christine Legarde, the Head of the International Monetary Fund, once again made the headlines yesterday, when she called for China to alter the make-up of its economy so that it was more mixed and less dependent on exporters and inward investment. She suggested that China would not be able to play a full part in the global economy until such changes were effected. Historically, China’s policy-makers have not reacted well to such ‘interfering’ from Westerners. Any comments with this theme from China’s leaders could cause appetite for risk to seep from the market during today’s session.

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