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Aussie could fall further even with stabilisation in commodities

Tuesday, Dec 29 2015
While a slowdown in China continues to hurt exporters, signs that the world's second-biggest economy is stabilising and increased clarity on the timing for US rate increases are bolstering speculation that commodities will rebound from their worst year since 2008. Crude, grains and soy are all expected to rise next year, even as precious metals such as gold slip or stay little changed, according to analysts surveyed by Bloomberg.
 
"There'll need to be some differentiation" among so-called commodity currencies, said Charles St-Arnaud, a senior foreign- exchange strategist at Nomura Holdings Inc. in London. He predicts the Aussie may fall 10 per cent by the middle of next year while the Loonie holds steady. Even a stabilisation would be a drastic shift after 2015, when each of the commodity currencies fell at least 10 per cent against the dollar. The Bloomberg Commodity Index, which tracks raw materials including gold, corn, natural gas and oil, has tumbled 25 per cent this year.
 
Aussie is currently being traded around 0.7260 area. Pair is likely to find support around 0.7250 handle and resistance above 0.73 level. Later today, in the US session, CB Consumer Confidence figures are scheduled for a release.
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