Australian Dollar Outlook - 04/04/2012
Bell FX Currency Outlook: The Australian dollar has opened lower this morning, to be currently trading around USD1.0320, and looks like it may break below USD1.0300 during our trading session today.
Australia: The AUD and other currencies came under pressure overnight as the USD surged following the release of the minutes from the FOMC.
Yesterday locally the RBA kept official interest rates on hold at 4.25%; while comments noted that the world economy would continue to grow below-trend this year, they did not suggest that a deep downturn is
occurring.
The RBA Statement also noted that while several European countries will record very weak results, the US economy is continuing a moderate expansion. China was also a focal point, stating that while growth in the region has moderated, as expected, it is likely to remain at a more measured and sustainable pace in the future.
While the RBA said that Australian economy is growing at a weaker pace than earlier expected, it does have room to move should it be required. The RBA will now wait to see the Q1 CPI data due out late April, and should that reading be lower than expected, it could pave the way for a rate cut in May.
Gold traded lower overnight to be currently trading at USD1,646.00 an ounce, while WTI oil fell 1.1% to be trading at USD104.04 a barrel. During our trading session today, we will see the release of the Australian Trade Balance data for February which is expected to show a surplus, following a fall in January's reading.
Majors: As mentioned above, the release of the FOMC Minutes from its March meeting suggested that further quantitative easing would be unlikely unless the economy lost momentum or if inflation slowed below a 2% annual pace. While the Fed did say it will continue to keep rates close to zero until late 2014, should the US economy continue to grow as it is, a rate hike within the next two and a half years is possible.
On the data front, in the US overnight the US factory orders was released, which reported a rise of 1.3% for February. Meanwhile in Europe overnight the equity markets traded lower as debt concerns in Spain re-emerged following the Spanish unemployment rising by a further 39,000 in March.
Economic Calendar
04 APR AU Trade Balance FEB
EU Euro-zone Retail Sales FEB
UK PMI Services MAR
US ADP Employment Change MAR