Australian Dollar Outlook - 09 May 2013
Bell FX Currency Outlook: The Australian Dollar remains below USD 1.0200 this morning as central banks around the world are reacting to the enormous levels of cash pumping through their economies.
Australia: This has been pushing up exchange rates and depressing activity in trade exposed sectors, as the ECB, BoE, Fed and Bank of Japan throw money at their ailing economies.
Yesterday, the RBNZ announced it had intervened in the currency market because of the strong NZD. The day before, the RBA cut rates to 53 year lows, citing the negative effect that the strong AUD is having on our economy.
The Aussie has essentially remained unchanged over the past 24 hours, languishing around 1.0180 but it took a downside hit about 3.00am AEST when a Financial Times article appeared, suggesting the RBA could have more rate cuts up its sleeve.
Today we expect a fairly quiet day but the 1.0150 level could be tested if the jobs report is weak today, and that testing level is very important. Interest rate markets have about a 40% chance of a June cut factored in at present and another full 25 bps of easing is being mooted heavily.
Swap rates continue to fall. It is a busy day for Australia today, with the monthly Labour Force report due at 11.30am AEST with forecasts for another fall in employment, down 10K for April, after a fall of 36k last month.
We expect the unemployment rate to remain unchanged at 5.6%, as does the market.
Majors: Over the past 24 hours, the Norwegian Krona was the strongest G-10- currency, gaining 1.6% against the USD, as the central bank left rates unchanged, having threatened to cut in March to stem the rise in their currency.
Other currencies recorded small moves, although it is worth noting the EUR jumped to a high around 1.3194 on another round of better than expected German industrial data. For equities, the rally continues and gold, industrial metals and energy commodities are all higher.
China has the CPI and Producer Prices scheduled for today, the former likely to show a slight uptick to 2.2% from 2.1% last month. In the UK, the Bank of England meets and the market is not expecting any change.
In America, the focus will be the latest weekly Jobless Claims layoffs report (which readers will remember fell significantly last week).
Economic Calendar
09 MAY AU Employment Change
AU Unemployment Rate
CH Consumer Price Index
NZ Unemployment Rate
UK BOE Announces Rates