Australian Dollar Outlook - 11/17/2011
Bell FX Currency Outlook:
The Australian dollar looks at risk of heading back down through the parity level in the short term.
Australia: The local unit initially took a tumble during yesterday's trading session upon the release of weaker than expected wages data. Australia's
wage price index rose 0.7% in the third quarter. Market expectations had been for a result closer to 0.9%, and as a result, traders once again began to price in quite aggressive expectations for interest rate cuts from the RBA over the next 12 months. Given the erosion in the AUD's relative
yield advantage, investors decided it was time to sell.
The selling pressure has re-emerged this morning on news that ratings agency Fitch have warned about the impact of the Euro-zone crisis on the US banking industry's credit outlook. The flight to safety is on again and the AUD, along with the other commodity related currencies (eg NZD, CAD etc), is feeling the pressure.
Majors: The Euro-zone debt crisis remains front of mind for global markets as confidence continues to wane. The EUR fell to five week lows against the USD as the contagion appears to be spreading. Speculation is growing that the ECB will be forced to buy even more European
Government debt to try and deal with the debt crisis.
Attention is now moving beyond Greece and Italy to France, the Netherlands and Austria. As mentioned above, the warning from Fitch in relation to the outlook for the US banking sector only added to the negative sentiment. Of some encouragement was news out of the US that US consumer prices fell last month for the first time in four months. Also out of the US last night, Bloomberg reported that Boston Fed President Eric Rosen had said that the US Federal Reserve might participate in co-ordinated efforts with the ECB to try and address the European debt situation.
Economic Calendar
17 NOV AU RBA's Stevens speak at Financial Event in Sydney
AU Average Weekly Wages AUG
UK Retail Sales OCT
US Philadelphia Fed Manufacturing NOV