The AWEX Regional Indicators finished 0.4% lower, on average, at sales in Sydney, Melbourne and Fremantle this week when the US exchange rate rose by 5.8%.

Although the market finished on a softer note, it was more settled over this week and last, with the EMI down by 2.8% (+1.1% in US), compared with 10.0% fall (-18.2% in US) over the previous four sales.

The market remains at historically high levels; and the EMI is 27.9% about the same week last year.

Growers again demonstrated a resistance to sell at this level, with high pass-in rates in all centres, apart from the North on Wednesday when it fell to 6.8%.

40,969 bales were on offer, compared with 42,836 bales last week. 14.9% were passed in, comprised of 8.9% in Sydney, 15.6% in Melbourne and 20.8% in Fremantle. Pass-in rates for Merino fleece and skirtings were 20.3% and 6.9%, respectively. 34,861 bales were cleared to the trade.

Although there is continuing uncertainty in Europe, the more confident outlook expressed in the global financial community last Thursday continued into this week, resulting in a return of currency to Australia and a sharp rise in the US exchange rate. The US exchange rate rose by 5.8% in the week and moved above 100¢ on Thursday for the first time in the last three weeks. Financial analysts attributed Thursday’s rise of 2.84¢ to the good employment data released in Australia that day.

There was greater optimism going into this week’s market, following the strong close on the previous Thursday, a more confident global economic outlook and overseas interest since then. This was realised when the market opened on Wednesday, particularly around the 19 to 22 micron area. The market then lost some of its momentum. But this did not prevent the AWEX EMI and the three Regional Indicators all finishing up by 2¢ at the end of the day. The market continued on a softer note on Thursday; more so in the South and the West than in the North when the US exchange rate rose by 2.8%.

It is difficult to separate the influence of market forces and exchange rates this week. Although the EMI finished down by 4¢ in Australian currency, the equivalent change in US currency was a gain of 61¢ (including 27¢ on Thursday), due to the large increase of 5.58¢ in the US exchange rate.