Australian Dollar Outlook - 07 May 2013
Bell FX Currency Outlook: The Australian Dollar has opened lower this morning ahead of the Reserve Bank's interest rate announcement today.
Australia: The AUD is trading down around USD1.0250 this morning after a fairly quiet night in offshore trade. Yesterday the AUD was looking firm around USD1.0300, however disappointing Retail Sales data for March saw the AUD sold off as the market was expecting a positive result.
Expectations were for an outcome of +0.2% for March; however the figure printed at -0.4%. All eyes are now on today's Reserve Bank interest rate decision, which could deliver a cut in the cash rate of 25bps to 2.75%. This would take the rate below the previous low of 3% between April and October 2009, which was termed an "emergency rate" at the time.
If we see the RBA cut then expect the AUD to be sold off, with a test of USD1.0200 likely. Also being released today is Trade Balance data for March; consensus is for a deficit of about $1 billion.
Majors: The USD rallied against most of its major counterparts on Monday night following last week's surprisingly upbeat report on the US Labor Market.
Positive investor sentiment meant US stocks held onto gains for the third straight trading day. Economic data in Europe painted a different picture and also led to concern that the European Central Bank may decide to cut interest rates again this year and this led to a sell-off in the EUR.
Euro zone data released overnight showed that retail sales contracted in March and services activity in Spain shrank last month at its fastest pace since last year.
Following the disappointing reports ECB President Mario Draghi said that policy makers will have to continue to keep a very close watch on all upcoming data and will take the necessary action if needed. There is no major data of note in Asia, US or Europe tonight.
Economic Calendar
07 MAY AU RBA Cash Target
AU Trade Balance
US Consumer Credit
GE Factory Orders