Trading through the European and US session on Monday was very quiet as there were public holidays in the US and UK, leading to limited volatility and lower trade volumes. The majority of FX crosses traded in relatively tight ranges with limited macro data to give direction.
The Aussie dollar has weakened against the Greenback over the last 6 weeks; analysts have been vocal for a prolonged period that the Aussie has been overvalued. The AUD strength has been fuelled by the commodities boom; demand for triple-A rated securities and from the carry trade. The mining is believed to be coming to an end, China’s growth is slowing and the RBA is cutting interest rates. The decline to below parity against the dollar has been a dramatic move with market commentators citing leveraged accounts being behind the move, with the The Australian citing the currency as "..the world's worst performing". UBS, Goldman Sachs and Commonwealth Bank of Australia were among those downgrading their outlook in recent weeks.
China is studying the possibility of investing a portion of its US$3.4 trillion in foreign-exchange reserves in US real estate
Taiwan plans to announce stimulus measures this week to boost the economy after lowering its forecast for expansion in 2013 as the global recovery falters - Bloomberg
Germany is in the midst of a real estate boom, as investors seek to capitalise on the powerhouse of Europe’s growth - Bloomberg
Moody’s may downgrade China’s sovereign rating if its GDP growth falls below 6% annually, according to Tom Byrne, the senior vice president of Moody’s sovereign risk group
S&P says France must deliver budget cuts to protect rating - CityAM
Chancellor George Osborne said in a radio interview on Tuesday 7 government departments have agreed to cuts