Australian Dollar Outlook - 10 May 2013
Bell FX Currency Outlook: The Australian Dollar has tumbled almost two US cents to its lowest level in more than 11 months and could well find itself below parity in the next 24 hours.
Australia: The AUD fell to USD 1.0047 overnight, its lowest level since June 2012. This morning the AUD had recovered some ground and was trading at USD 1.0092, but was still well down from yesterday afternoons USD 1.0240 level.
The sharp fall in our AUD was the result of a surge in the value of the US Dollar against all major currencies, the rally in the
Greenback following when it pushed above the 100 level against the JPY.
A lot of investors / speculators were waiting for the USD to break above JPY 100 and now that it has happened, this has prompted a piling back of big traders into the USD.
The AUD may regain some ground early today as profits get taken but do not rule out a move lower later in the day and a
potential test of parity. We should not underestimate the significance of the range-break at 1.0150, in particular, to the extent that persistent currency strength was one motive for this week's RBA rate cut.
This latest move, could remove, almost at a stroke, a major incentive for the RBA to follow up this week's cut move anytime soon.
The move lower should also prove supportive for equities, if not quite to the degree that the fall in the JPY has spurred the dramatic rally in Japanese stocks since late last year.
The RBA's Statement on Monetary Policy is the local highlight today and as far as the AUD, it literally anyone's guess!
Majors: Currencies were very much the centre of global market attention overnight. In Europe, UK industrial production was stronger than expected in March, rising by +0.7% m/m against expectations of a modest rise.
Manufacturing production drove the result, rising by +1.10%. As expected, there was no change in policy from the Bank of England.
Yesterday, China's CPI inflation remained subdued in April, as poultry and pork prices fell sharply due to the outbreak of the bird flu and due to slower growth after the Chinese New Year.
Given the overnight moves there will be keen interest in the weekly Japan MoF portfolio flow which will cover the previous two weeks because of last week's Golden Week holidays, for any evidence of Japanese investor outflows. In Europe, German and UK trade data is due while Canada has its April Employment report.
Later, Fed Chairman Bernanke speaks at the Chicago Fed's annual conference, but this in on bank structure and competition so may be of limited interest from a macro/policy perspective. Have a great weekend.
Economic Calendar
10 MAY AU RBA Statement on Monetary Policy
CH Money Supply
UK G-7 Finance Ministers & Central Bank Heads Meet
US Fed Chairman Bernanke Speaks In Chicago