Aussie dollar weakens as investors sell high yielding currencies

The Australian dollar weakened yesterday amid heavy selling of high yielding currencies as investors again turned cautious. The aussie was also weighed down by concerns that the government’s proposed stimulus package would not pass in time to meet its time table. The Federal opposition has opposed the bill and despite it passing the lower house it still needs to be passed by the senate. Sterling was also buoyed yesterday by data revealing that the deterioration in the UK service sector had slowed in January. Market focus will now shift to Europe, with the BoE and the ECB making rate decisions later today. Investors are unlikely to undertake heavy positioning ahead of this, as economists are forecasting the BoE could cut anywhere from 50 basis points to 100.