Australian Dollar Outlook - 02/10/2012
Bell FX Currency Outlook:
The Aussie traded to a low of USD 1.0740 in our session yesterday, to open at USD 1.0785 this morning with markets buoyed as Greek political leaders appeared to have come to an agreement on terms for the country's bailout.
Australia: US stocks rose modestly on the positive headlines from Greece, with the S&P 500 index rising for a third day to close up 2% to 1352, the Dow Jones added 0.1% to 12896. European equities also rallied on the positive news with the German DAX closing up 0.6% higher 6789 and the FTSE 100 closing 0.3% higher at 5895.
Chinese CPI has rebounded to 4.5% for January vs a 4.1% the previous month. Due largely to Chinese new year festival effects, this read is significantly higher than market expectations of 4.0%. A read like this could see the PBoC more cautious in its policy easing and could delay a cut to the reserve requirement ratio expected in 2012 for China.
Chinese Trade data is due for release today with Chinese New Year holidays likely to affect figures with export and imports expected to have declined by 6.1% y/y and 8.1% y/y in January.
In Australia the key focus will be the release of the RBA's Quarterly Statement on Monetary Policy at 11:30am today. Focus will be on risks to unemployment along with Fair Value for the Australian Dollar and the further understand Tuesdays no move on interest rates.
Majors: Greek Political Leaders have come to a long stalled agreement on harsh austerity measures and reforms required to secure a second international bailout overnight.
The agreement will be discussed at the European Finance Ministers meeting in Brussels tonight. There is still a lot of uncertainty surrounding the bailout with the EU Economic Commissioner, Olli Rehn stating the bailout package would not immediately be approved and that the Greek Government still needed to prove itself through "concrete actions and legislation to convince its
European partners a second programme can be made to work."
Discussions appear to have started on a positive note with the ECB signalling it was willing to forgo profit on its holding of Greek debt. Meanwhile the bank of England has extended its QE programme expanding the Asset Purchase Facility by 50 billion pounds to 325 billion with official rates left unchanged. The ECB also left rates unchanged but seemed a little more upbeat in its statement with the word "substantial" removed from "downside risks".
Economic Calendar
10 FEB AUS RBA Statement on Monetary Policy
CH Trade Balance Jan
US Trade Balance Dec