5/4/2011

The Australian dollar is taking quite a beating on the day – falling by about 80 pips since the overnight and a bit more than 2% since hitting the $1.10 record on Monday.

Across the Pacific, the Mexican peso has also turned lower, against the US dollar, falling to 11.61 from 11.48 on Monday – despite bullish speculation on the country’s economy and interest rate policy.

Further commodity selling is helping to exacerbate the decline in the commodity currencies. Although gold remains relatively lofty, prices for the metal have come down since the hitting its own individual record. Gold contracts are down by 1.65% in the New York afternoon trade. Comparatively speaking, silver contracts continue their 20% weekly freefall. Already down another 7%, contracts for silver continue to exhibit position extraction as the CME had raised margin levels for the third time in the past week.

Until this flurry of volatile capitulation subsides, we won’t see a return to fundamental normalcy.