Australian dollar consolidates

The Australian dollar consolidated from recent weakness against sterling yesterday, after offshore data was not as worse as forecast. However, investor sentiment remains fragile, with the Swine flu and continuing concerns over the banking sector making investors reluctant to take on higher risk currencies such as the aussie. Commodity prices also remain weak, which is likely to weigh on the aussie. Markets are likely to wait and see what the consequences of the Swine flu are, and whether it will be upgraded to a pandemic; this would likely cause further risk aversion, but if the virus is contained risk aversion will probably fade quite rapidly.