Australian Dollar Outlook - 11 March 2013
Bell FX Currency Outlook The Australian Dollar has fallen modestly after the US jobs data on Friday night was better than expected.
Australia: We start the week trading in the low 1.0200's after February non-farm payrolls in the US expanded by 236k as compared to the 165k of new jobs expected. In the past, the AUD would have held or gained strength but on Friday it fell as the USD strengthened across the board.
Although the previous two months of job figures were revised downward by 15k the encouraging employment picture propelled the Dow index to a new high.
The three major equity indices in the US are all strongly up thus far in 2013 (Dow +9.9%, S&P500 +8.8% and NASDAQ +7.5%).
On the weekend we saw economic figures for China for the first two months of 2013. Relying on the figures for the two months is meant to average out the effects of the recent New Year holiday.
The CPI index rose 3.2% y-o-y and industrial production rose 9.9% as compared to an increase of 11.4% in 2012. Retail sales continued to lag from a year earlier rising 12.3% as against the 14.7% increase in 2012.
Fixed asset investment rose 21.2% which was slightly higher than the 20.6% for the full year of 2012.
This last figure offers a clue on how much infrastructure spending is occurring as the central planners try and maintain GDP growth around the 7.5% figure.
Within the next week the official handover of power will occur in China. We expect a quiet day of trading locally with the states of Victoria and South Australia on holiday today.
Majors: The better US job figures saw the unemployment rate fall to 7.7% from 7.9% which is the lowest since December 2008. With a rise in inventories of 1.2% in January which is the best monthly improvement since December 2011, the hopes of a better than anticipated Q1 GDP were raised.
In Europe equity markets were all modestly higher even as the EUR weakened against the USD as Fitch lowered the credit rating of Italy by one notch to BBB+ with a negative outlook.
This result is not unexpected given the hung parliamentary situation that still exists in Italy.
The ratings agency sees the Italian economy contracting by 1.8% in 2013, which is higher than the budgeted level of a 0.2% contraction by the more austerity minded outgoing Monti led government.
The continuing weakness of the GBP and JPY has resulted in the AUDGBP hitting a 28 year high on Friday's trade while the AUDJPY traded to its highest level in over four years.
Economic Calendar
11 MAR AU Public Holiday VIC, SA, TAS, ACT
JP Core Machinery Orders m/m
EU German trade balance
EU French Industrial Production
EU CHF Retail Sales
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