Australian Dollar Outlook - 12/02/2011
Bell FX Currency Outlook:
The Aussie dollar remained steady overnight holding onto the huge gains it made yesterday; opening around USD1.0230 this morning, up from a low of USD1.0150 during the offshore session.
Australia: The coordinated action by six main central banks to reduce funding costs for banks continues to calm markets for the time being.
Improved investor confidence was seen with the successful French and Spanish bond auctions overnight. Spain and France sold EUR8.1 billion of bonds, sending yields lower across Europe. Local data failed to impress yesterday with Australian Retail Sales released at +0.2% versus a +0.4% expectation.
Building Approvals also disappointed, and were well below the expected 3.6% at -10.7%. Chinese Manufacturing also moderated in November, with the PMI read at 49.0 for the month, down from the previous 50.4 in October. The decline was broad-based, suggesting an outright contraction in the sector. Australia's four major banks had their long term credit rating cut to AA- by Standard and Poor with a stable outlook. This followed changes to the ratings criteria for banks and was widely expected with virtually no reaction.
Majors: A fresh sign that the US economy is accelerating and providing support to markets, the ISM manufacturing index rose to 52.7 in November up from 50.8 in October and its highest level in five months. Meanwhile, Initial Jobless claims rose slightly to 402k from 396k seen last week.
Jobless claims have trended downward of late. Wall Street eased overnight after the Dow Jones posted its best run in almost three years giving up 0.4% to close at 11,997.09. European shares also gave up gains with the DAX off 0.9% to 6035.88. Gold and oil followed suit closing at USD1,744.90 an ounce and USD108.96 per barrel.
Base metals mostly fell with Copper off 1.2% to $7,790 per tonne as the weaker Chinese PMI data raised demand concerns.
Economic Calendar
2 DEC EUR Euro-zone PPI OCT
US Change in Non-Farm Payrolls NOV
US Unemployment Rate NOV
UK PMI Construction NOV