Australian Dollar Outlook - 10/08/2012
Bell FX Currency Outlook: The Australian Dollar has fallen one US cent, as markets adjust their view on the Australian economy to one of weakness, following last week's dovish outlook on the global economic outlook by the Reserve Bank of Australia.
Australia: Last week the RBA cut the cash rate by 0.25% to 3.25% citing a worsening global economic outlook and falling commodity prices. The
AUD is starting to feel the effect of this decision and the factors behind it and is eyeing 1.0150 before testing a potential bounce back, given the
extent of its fall over the last week.
On Friday night, US non-farm payrolls data was the key release and the report was generally positive. In currency markets, the release of the US employment report saw weakness in the AUD and the NZD and the AUD was also weaker against many of the currencies in the trade-weighted basket.
The reaction of the US Dollar to the US employment report has added incremental evidence to the case that better US data is now associated with a firmer currency and if that is the case, that could be a genuine game changer for our AUD and could see it test parity in coming weeks.
That said, given where it has been for the last 2 years, and the psychology involved (or lack of it), dips are still expected to be shallow for now. Today we have ANZ Job Ads for September out at 11.30 and the HSBC China Services PMI at 13.30.
Majors: The US Dollar found strength following the release of the US nonfarm payrolls report which revealed payrolls growth consistent with market expectations. The real surprise was a big drop in the unemployment rate to 7.8% thanks to an out-sized 873k gain in household employment
measure (the survey used to measure the unemployment rate).
Markets ended the week mixed with Greece and Spain still front of mind with the Euro-zone finance ministers meeting tonight, Spain so far resisting applying for a bail-out and Greek budget cuts still being mulled over. A weaker than expected German factory orders report on Friday was a sober reminder of the weakened growth state of the strongest economy in the zone.
Equities were higher in Europe and mixed in the US. Oil fell in volatile trading on Friday as uncertainty over the global economy and
Europe's debt crisis outweighed support from better-than-expected US employment data.
Economic Calendar
08 OCT AU RBA's Glen Stevens Before Parlimantary Panel
AU ANZ Job Ads
GE Trade Balance
EU Europegroup Finance Ministers meet in Luxemburg
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