Australian Dollar Outlook Feb 9

Lingering concerns regarding the Euro Zone's debt position sent the Dow Jones to a close below 10,000 for the first time since November.

It slumped just over 1% to 9908.39 with a late-day selloff accelerating the fall in the final hour of trade.

Global markets demonstrated fragility as the market became increasingly concerned for the well being of Greece, Spain and Portugal who may not be  able to stabilize their public finances, having spent heavily to combat recession.

What these problems in the Euro Zone do are raise fears about the global economic recovery, even if the immediate debt crisis is averted.

The AUD spent most of yesterday consolidating inside recent ranges, and holding just above short-term levels.

With the increase in risk aversion, high-yielding assets such as equities and commodity currencies will remain under pressure.

We see the AUD trading between 0.8640 and 0.8710 during today's local session. Analysts and experts are amending parity forecasts somewhat until global economic growth appears more likely, and with that, higher commodity prices.

There are still many calling parity, but now later. There isn't any local data today.

Tomorrow sees the release of the consumer sentiment index and December's housing finance approvals, with most economists expecting a sizable decline.

Thursday's labour force data will be important for the AUD as it sets a decent pathway to the RBA's March decision.

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Majors: As stated above, global concerns about Europe was the main development last night and earlier in the night, EUR/USD fell to 1.3625, however a weak USD saw the decline abate.

Europe's fiscal position is likely to remain the key for the market this week at least and the key will be the rhetoric from European policy makers, who are remaining defiant that the situation is in fact under control.

Other news to be watched will be this week's Chinese CPI and Loan data, in light of its policy tightening.

Provided by bellfx.com.au