The Australian dollar retreated further from parity against the US dollar on Monday, although many thought losses were driven by profit-taking and could be short-lived.
At the local close, the dollar had eased to $US0.9848, well off a high of $US1.004 hit offshore on Friday. That was the first time the currency had raced above $US1 since it was freely floated in 1983.
Charts showed resistance at $US1 and strong support on a daily channel at $US0.9785, followed by October 12 lows of $US0.9767.
Traders said profit-taking had gathered steam on a bout of short-covering in the US dollar, which weighed on commodity prices and encouraged more selling in the pair.
But many believed the pull-back was temporary given the US dollar's sluggish outlook, which contrasts with the pair's buoyant fundamentals, especially in the case for the Aussie.
Indeed, National Australia Bank told clients it expects the Australian dollar to rise to $US1.05, thanks in part to Australia's booming commodity trade with China and India. The bank advised investors to buy the currency if it pulls back to $US0.9650.
"Our longstanding thesis is that a structural appreciation in the Australian dollar is underway," the bank said. "The terms of trade boost to the Australian economy is the largest since the 19th century."
And unlike other fast-rising currencies in Asia, the Australian dollar carries little risk of intervention from authorities. Australian Treasurer said on Monday any intervention would be "dangerous".
Reuters