Australian Dollar Outlook 11/03/2011

The Australian dollar had a relatively quiet session overnight despite the ongoing turmoil in international markets.

Australia: Uncertainty continues to prevail in Europe, even more so now following the unexpected decision of the Greek Prime Minister to call for a referendum on the country's bailout package. The AUD has held up relatively well in the last 24 hours, but further moves lower may occur if the situation in Europe is not contained. Today local markets will be focusing their attention on the release of Retail Sales data for the month of September. Market expectations are for an increase of approx. 0.4% m/m.

The NZD has been sold off a little this morning on the back of weaker than expected employment data. New Zealand's Q3 unemployment rate rose to 6.6% from 6.5% in Q2. Analysts had been expecting the unemployment rate to fall to 6.4%, and as a result NZD/USD is trading back down below USD0.7900.

Majors: News services are reporting this morning that the Greek referendum will take place on December 4th. The Greek Prime Minister George Papandreou has been meeting with other European leaders in emergency talks to try and resolve the crisis situation. Equity markets in Europe managed to record some gains despite the uncertainty, with the

German DAX up 2.2% and the FTSE up 1.2%. In the US overnight, the FOMC released a statement following their two-day policy meeting. The tone of the statement was a little more positive than previous recent statements, noting that "household spending has increased at a somewhat faster pace in recent months". However, Ben Bernanke, who spoke at a press conference following the release of the statement, offered a relatively gloomy outlook for the US economy, stating that the pace of recovery remains "frustratingly slow, and opening the door for another round of quantitative easing (QE3)

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