Australian Dollar Outlook - 02/13/2012
Bell FX Currency Outlook:
The AUD tumbled on Friday from the close to 1.0800 to open just below 1.0700 this morning as financial markets became nervous
before the vote on austerity measures by the Greek Parliament.
Australia: All major share indices in Europe and the US finished lower on Friday with the Dow and S&P500 both lower by 0.69% after most major European indices were also lower by a slightly larger margin (Euro Stoxx 50 was lower by 1.65% and German DAX by 1.4%).
This snapped a rally of five consecutive weeks in equity markets, the longest since January, 2011, on the premise agreement was about to be announced in regards to the second bailout of Greece.
Adding to the softness of the AUD was the release of China's January trade data that saw exports fall 0.5% from the previous year to US$149.9bn while imports were off 15% to US$122,7bn.
Even allowing for the effects of the New Year holiday these figures are disappointing and may be indicative of a greater slowing of the Chinese economy than previously thought. The global trade surplus tripled to
US$27.3bn.
On Friday, the RBA's Quarterly Statement on Monetary Policy projected inflation and GDP to be slightly lower than previous forecasts (3% and 3.5%, respectively) and unemployment to increase in the short run before trending lower.
They assumed the value of the AUD to be $1.07 but made no predictions on its future direction. Today, housing finance for December will be released and the market expects a rise of 1.8% m-o-m as the effects of the December rate cut encouraged buyers.
Majors: Greek Prime Minister Lucas Papademos was appealing to his countrymen to support the austerity bill that is equivalent to cutbacks of 7% of GDP over three years and include such things as a 22% reduction in the minimum wage, smaller pensions and immediate jobs cuts for as many as 15,000 state workers.
Five ministers resigned from Papademos's interim government on Friday rather than vote for the new austerity measures. A number of minority party members have expressed their animosity to the package and comments by German Finance Minister Schaeuble that Greece was missing reduction in budget deficit goals and they needed to do more did not sit well with some Greek politicians.
Euro area finance ministers are scheduled to meet on Wednesday and a formal offer to private bondholders needs to be made by February 17 to allow enough time to finalise arrangements to meet the EUR14.5bn bond repayment in March.
On Friday in the US, the Thomson Reuters University of Michigan consumer sentiment survey fell to 72.5 from last month's 75
which was the highest since last February indicating ongoing concerns in
many consumers' minds.
Economic Calendar
13 FEB AU Home Loans DEC
JN GDP Q4
EU Announces Bond Purchases