Another strong week for the Australian dollar, which hit a series of new four month highs in offshore trading on Friday night and early Saturday, our time.
The dollar closed at 92.47 USc early Saturday, up by 1.5 USc over the week and a big rise.
It almost reached 93 USc in US trading, topping out at 92.95c before falling back to its eventual close.
The currency has ignored the repeated prediction that it would fall, crash or be crunched by the ‘economic reality’ of the Australian economy, or a stronger US dollar.
All of that might happen – but as to when, no one really knows.
What will be interesting this week is whether the rise last week forces the Reserve Bank and governor Glenn Stevens to once again try and talk the value of the currency lower.
Will, for example, the governor revert to describing the $A as “uncomfortably high” again – especially as it is now actually above the levels it was last December when those words were last used. In fact Mr Stevens nominated 85 USc in a media interview at the end of the year.
That level is now long behind the dollar, for the moment at least.
AUDUSD 6-Month – Aussie heading for solid March gains
The Reserve Bank has been largely silent on the dollar’s value so far this year and the minutes of the March board meeting were notable for their lack of any commentary, even though the currency was rising.
It is now well above its end of year level of just over 89 USc.
That means the currency will have a gain of around 3%, which no one saw in their start of year forecasts.
The strength of the Aussie dollar isn’t being liked by Australian exporters, especially gold miners.
Higher iron ore prices (the price rises are being eroded by the high dollar) boosted the prices of BHP Billiton, Rio Tinto and Fortescue last week (up 7.1%) to $5.34.
BHP shares rose a more sedate 1.6% to $36.14, and Rio Tinto added 3% to $63.24 despite the delays to the $US6.2 billion Oyu Tolgoi gold and copper project in Mongolia.
But shares in Newcrest Mining fell 7.1% to $9.80, while small goldminer Medusa Mining stood out with a 11.6% slump to $1.99.
In commodities, copper had a better week last week – its best for six weeks, with the US Comex futures price up almost 5c, or 1.6%, to end at $US3.04 a pound on Friday, for a weekly rise of just under 3%.
On the London Metal Exchange, three month copper rose 1.4% to $6,655 a tonne ($US3.02 a pound) on Friday.
Helping sentiment were those reports of possible stimulus spending by China and a 7.7% fall in the stocks of the metal monitored by the Shanghai Futures Exchange. That was the largest fall this year.
“This Shanghai drop in stocks may be one of the reasons why copper went up,” Herwig Schmidt, head of sales at Triland Metals Ltd. in London, said by telephone today.
Gold futures in New York on Friday closed under $US1,300 for the first week in six.
Comex gold for June delivery, fell 50c to settle at $US1,294.30 an ounce after touching a low of $1,286.10.
Prices were down 3.1% for the week, but are up about 7.7% for the quarter with only trading today to go.
Silver ended a nine-day losing streak, with Comex May silver adding 8c, or 0.4% to finish at $US19.79 an ounce. That left it down 2.6% for the week.
And New York oil futures saw West Texas Intermediate type oil rise 41c to $US101.69.
That left prices up 2.3% for the week and 3.3% for the quarter so far.
In London, Brent crude oil futures for May settlement ended up 5c to $US107.88 a barrel on the ICE Futures Europe exchange.
Prices rose 1.1% last week, but are down 2.5% for the quarter so far as Brent’s premium over New York narrows.
