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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: RealMuLan who wrote (17040)	11/29/2004 8:19:26 AM
From: mishedlo	Read Replies (1) of 116555

Forex - Australian dollar falls on record current account deficit Monday, November 29, 2004 8:42:27 AM afxpress.com SYDNEY (AFX) - The Australian dollar was trading weaker following the release of September quarter balance of payments data showing a record 13.685 bln aud current account deficit, worse than the consensus forecast deficit of about 15.2 bln, dealers said They said the poor result is likely to lead to a downward revision of gross domestic product growth forecasts to the region of 0.3 to 0.5 pct for the third quarter from a consensus 0.7 pct At 12.45 pm the Australian dollar was trading at 0.7853 usd from 0.7880 just before the data's release at 11.30 am and a low of 0.7834 following the release Dealers said the while Australia's economic fundamentals remain strong, the lower growth forecasts lessen the chance of interest rates rises, reducing the dollar's attractiveness as a high yielding currency The Australian dollar had been bid up to nine month highs approaching 79.25 usd last week as the US dollar weakened on US current account deficit funding concerns. "Our current account refuses to improve and is showing signs of deteriorating which on a Monday morning hasn't helped with the market having been caught long (the Australian dollar)" Westpac Banking Corp head of currency strategy, Robert Rennie said He said third quarter gross domestic growth forecasts will be cut as a result and yield differentials are likely to narrow Rennie said funding concerns relating to the US current account deficit have heightened interest in deficit numbers although there are not near-term concerns as far as the Australian deficit is concerned "The balance of accounts data doesn't show there is any problem funding Australia's current account deficit - indeed the reverse is the case with the current account continuing to be met by over funding but as we know there is a risk and the market is beginning to focus on that," he said

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