Australian Dollar Outlook - 08/06/2012
Bell FX Currency Outlook: The Australian Dollar has maintained its firm tone this morning, after US jobs data on Friday night were higher than expected, fuelling a jump in major equity indices in Europe and the US.
Australia: An equity rally on Friday helped the AUD maintain its recent strength, driven up by the best jobs numbers in the US for the last five months, where 163,000 new jobs were created in July.
Along with a reassessment by many analysts, after the disappointment last Thursday evening of the ECB to provide further stimulus was regarded by many as an over- reaction by the market, equity markets were firmly higher with many indices up by 4-5% (Euro Stoxx 50 was up 4.8%).
This spilled over into the US session with the Dow up 1.7% to 13,096. All commodities were higher, with oil jumping to over US$91 a barrel for WTI crude and Brent oil closing above US$108 a barrel.
Today we will see job ads data from the ANZ plus TD's inflation data for July. This will be followed tomorrow by the RBA's decision on interest rates, where the market anticipates no change to the current 3.50% cash rate. Thursday will see the release of our employment data followed on Friday by the RBA's Statement on Monetary Policy, which will be closely examined for further hints of interest rate policy direction.
In the last two weeks, the market's expectations of further interest rate reductions have changed, although over the next nine months further decreases of 75 bps are still projected.
Banks in New South Wales are closed today for their annual Bank Holiday.
Majors: The financial markets were buoyed by better US jobs numbers that saw private sector employment rise by 172,000 with a loss of 9,000 in government jobs leading to a slightly higher unemployment of 8.3%.
The labour participation fell only slightly to 63.7% from last month's 63.8% figure. In Europe, the EC, ECB and IMF met with Greek officials to discuss further cuts to government spending of approximately EUR11.5bn over the next two years and they commented "the discussions on the implementation of the program were productive and there was an overall agreement on the need to strengthen policy efforts to achieve its objectives".
In September, they will review how that process is progressing. The EUR/USD has improved almost 3 cents to over 1.2400 this morning since late last week on the more positive tone in all financial markets today.
Economic Calendar
06 AUGUST AU NSW Bank Holiday
AU TD Securities Inflation JUL
AU ANZ Job Advertisements AUG
EC Sentix AUG