Australian Dollar Outlook Feb 8

In Europe, the FTSE was lower by 1.5% to 5061 and the DJ Euro Stoxx 50 was off by 2.8% and the German DAX by 1.8%.

In the US, the Dow was up only 10 points higher o 10,012 and the S&P 500 rose 0.3% to 1066 and the NASDAQ kicked up 0.7% to 2141.

Along with the slide in the AUD, oil fell to a 7 week low finishing just above US$71 a barrel and gold touched a 3 month low and then recovered to be only slightly down at US$1,053 an ounce.

This morning the AUD has traded above 0.8700 as some of the pessimism in the market might have been overdone.

On Sunday Treasurer Swan announced that the Australian Government guarantee for large deposits and wholesale funding for banks would be withdrawn on March 31.

Deposits up to AUD1m will not be affected. Australian jobs data for January will be released on Thursday which if positive may give the AUD a boost.

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Majors: In the US, markets reacted negatively on Friday after a decline in January payrolls when the market was expecting a rise of 15k.

Of further concern was the downward revision to the previous 5 months of results by  245,000.

The unemployment in the US fell from 10% to 9.7% in January and some optimism crept into the market when US manufacturers added workers for the first time in 3 years last month.

 Consumer credit fell by US$1.7b for the 11th straight month in January as consumers reduce their spending.

The EUR moved up over US$1.3700 after ECB head Trichet said he was confident Greece  could reduce its budget deficit to below 3% of GDP from its present level of 12.7%.

Provided by bellfx.com.au