By 0600 GMT on Tuesday, the Aussie bought $0.7623/28, off a two-week low at $0.7595 struck in offshore trade but facing stiff resistance at $0.7650. It had climbed to an 11-month high of $0.7794 last week.

The commodity and energy markets seem well supported in general and are likely to continue their trend up on a long term basis, but recent sharp rises where calling for a correction. And I think from now on we can expect a bit more volatility and the move up to be taken more slowly with some setback.

Gold is a major export for Australia and therefore is highly correlated to the $AUD. Last week as the $AUD was climbing to a 11 months high, Gold was reaching a 26 year high at $730 an ounce. But in the last day, we have seen Gold drop to a low of $675.00 an ounce.

“The atmospherics have certainly changed for the Aussie since the end of last week,” said Tony Morriss, senior currency strategist at ANZ Investment Bank.

“Bullish sentiment on the back of super-cycle commodity forecasts have turned to reflection on how such price gains can be sustained without demand weakening, especially if price action has looked bubble-like,” he said.

“The Aussie dollar is likely to remain under pressure if commodity prices continue to correct … expect underperformance versus the euro, Swiss franc and yen,” said John Kyriakopoulos, currency strategist at National Australia Bank.

Still, first-quarter wage inflation data due on Wednesday could see attention return to Australia’s yield advantage. Market expectations centre on a rise of 1.0 percent quarter-on-quarter and a rise of 4.1 percent year-on-year.

A higher-than-expected outcome could heighten expectations for another rate rise later this year, lending yield support to the currency. September bill futures nudged up, but still implied a yield 28 basis points above the 5.75 percent cash rate.

COMMENTARYS

Do you think the Aussie Dollar will bounce back? Are we just seeing the beggining of a commodities correction, or is it just a small step back before moving to new highs? Would an interest rate liekly to support an Aussie dollar if commodities cool down? Let me know what you think.