Australian Dollar Outlook - 03/28/2012
Bell FX Currency Outlook: The Australian Dollar has opened lower this morning following a fall in Chinese Industrial Profits yesterday, which was the first drop in profits since 2009.
Australia: The data released by China's National Bureau of Statistics overnight showed profits in the country's industrial sector fell 5.2% in the first two months of 2012. Given the link between Australia's prosperity and China, this news would seemingly translate into weakness for Australian profits, and hence, the AUD reflected this accordingly.
A rally in US Treasuries occurred after Fed Reserve Chairman Bernanke's comments pertaining to the persistently and uncomfortably high unemployment rate, which saw the USD bid and placed further downward pressure on our AUD.
RBA Assistant Governor Guy Debelle repeated his now familiar warning regarding the high AUD, relative to the terms of trade (commodity prices) and how much of a concern this was to the Bank.
Today the RBA releases its semi-annual Financial Stability Review which is a detailed update of the financial health and outlook of the financial sector, covering household finances and the health of corporate and business balance sheets.
In Asia today there are few releases of note and it is starting to be felt the AUD and NZD will enter a consolidation phase ahead of more US data this evening and further appearances from US Fed Speakers (and whether they will continue to talk down the pace of the recovery in the US economy).
We wouldn't be surprised if the AUD sold below 1.0400 in the immediate term. The upcoming data releases and speeches out of the US and China will be used to gauge the extent of slowing in the global industrial cycle and where the AUD may base itself in the upcoming months.
It will be very interesting to see if this sees the AUD with a "0" or a "1" in front of it!
Majors: The US Dollar was slightly stronger in response to softer US equities and the firmer US Treasury market. US housing price data and consumer confidence data only just met expectations and there were several Fed speakers attempting to reduce the market's recent optimism of the vigour of the US economy.
In Europe, Italy held a successful debt auction. €3.8bn of debt was sold, €2.8bn of 2-yr bonds yielding 2.35%, the lowest since November and down from 3.01% in Feb. €1bn of inflation linked bonds of longer duration were sold.
Tonight sees GDP estimates in France and the UK whilst the US has Durable Goods Orders, which provides an update on business investment in America.
Economic Calendar:
28 MAR AUS RBA Board Financial Stability review
GE Consumer price Index Mar
UK Current Account 4Q