Australian Dollar Weakened by Strong Oil Prices

The Australian dollar weakened as the surge of the oil prices on concern about the Libyan revolt caused the decline of stocks and commodities and reduced risk appetite. The clashes between the protester and the forces loyal to Libya’s leader Muammar Qaddafi intensified, leading to worries that supply of oil will be cut. April delivery for crude oil rose to $105.44 per barrel on NYMEX, posting the highest price since September 26, 2008 and the gain by 29 percent from a year ago. The Standard & Poor’s 500 Index of stocks dropped 0.8 percent and the MSCI World Index slid 0.7 percent yesterday.
John Kyriakopoulos, head of currency strategy at National Australia Bank Ltd., predicted:

For the Australian dollar the near-term outlook will be driven by the crude oil price. If the sharp rise in oil isn’t reversed soon then stocks, risk appetite and metals prices could continue to fall, knocking the Australian dollar lower.

AUD/USD traded near 1.0128 as of 1:24 GMT today after falling yesterday from 1.0148 to 1.0089. EUR/AUD traded at about 1.3787 after it rose on the previous trading session from 1.3789 to 1.3802. AUD/JPY traded at 83.35 after the yesterday’s decline from 83.44 to 83.19.