Citigroup Inc. : Australian Dollar Traders Get That Monday Feeling, Citigroup Says
09/24/2012| 05:44am US/Eastern
By Eva Szalay
Monday tends to be a bad day for the Australian dollar, which is developing a habit of starting the week with pronounced weakness against its U.S. counterpart, Citigroup pointed out in a research note Monday.
The Australian currency, which is highly sensitive to developments in the Chinese economy, is currently trading just above $1.04 against the dollar, some 1.6% below its highest point on Friday, in what is becoming an increasingly common pattern.
"The Australian dollar has dropped the last five Mondays, six of the last seven, and 10 of the last 15," currency strategist Steve Englander said in a note to clients.
Mr. Englander cites the "China effect" for the currency's curious trading pattern, noting that investors seem to go into the weekend with high expectations that Chinese policymakers will announce additional steps to boost their economy--a step that would in turn likely boost Australia because of the two countries' close trading links.
"We find that the Australian dollar has gone up 10 of the last 15 Fridays," Mr. Englander added. He said traders are so keen to avoid missing out on a potential rally in the currency, should easing measures materialize, that the usual macroeconomic factors driving the so-called Aussie tend to be overlooked towards the end of the week.
But Mr. Englander cautions against trying to piggyback on this trend in forming trading strategies. "We would not use this pattern as a basis for trading because it is quite possible that one weekend China will ease," he said.
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