Australian Dollar Outlook - 06/15/2012
Bell FX Currency Outlook: Markets have ended higher, in what was a volatile week, as the G20 gives risk a boost ahead of Greek elections this weekend.
Australia: Central banks from major economies announced they will take steps to stabilise markets and provide liquidity if necessary as Greek voters go to the polls in an election that could see the country exit the Eurozone.
The Australian dollar climbed back to parity against the Greenback overnight as prospects of another round of stimulus for the US pushed commodity prices higher. In what will be a relatively quiet day as markets tread water ahead of the weekend polls, the local unit should hold onto its gains today.
If however, parties opposed to Greece's tough austerity plan - which would see them have to make 15bil in spending cuts - win over the weekend, the dollar may fall back to its recent lows very quickly.
Given we were back at USD0.9620 on June 4, and the many issues that caused the pull-back have not gone away, importers would be advised to consider some cover with this recent rally.
Majors: US equities jumped overnight as an unexpected rise in the number of Americans filing for unemployment benefits jumped to 386k overnight. Expectations are growing the Federal Reserve may signal the printing of more money or "QE3" to counter sluggish growth at their meeting next week.
The S&P 500 rose 1.1% to 1,329 with the Dow Jones ending the session up 1.2% to 12,652. Gold prices ended slightly higher off the disappointing read to close at USD1624 per ounce.
Oil prices also rose as OPEC agreed to keep the collective oil output unchanged at 30m barrels per day. WTI rose 1.8% to USD 84.4 per barrel and Brent rose 0.8% to USD 97.9 per barrel. European equities were mixed although little changed with the German DAX ending the session 0.2% lower at 6,139 whilst the FTSE fell 0.3% to 5,467. This weekend will prove to be a critical juncture for Greece and the Eurozone. Markets will likely view a new Democracy win more positively and less disruptive.
Economic Calendar
15 JUNE EU Euro-zone Employment Q1
UK Trade Balance APR
US Empire Manufacturing JUN
US Industrial Production MAY