Australian Dollar Outlook - 12/14/2011
Bell FX Currency Outlook:
The Australian Dollar is hovering around Parity following a night of slightly disappointing US Data and the FOMC (Federal Open Market Committee) rates decision this morning.
Australia: The FOMC left rates unchanged at 0-0.25% as was widely anticipated, and in the accompanying statement, a downbeat tone was quite evident.
The Fed described the economy's outlook for growth as moderate, noting the key risk was from strains in global financial markets.
The AUD is feeling the effects of the pessimistic sentiment from the Euro Zone. There is downside potential over the next few days, and this is despite some slightly better news with bond sales in Italy and Spain.
In Australia today, the Reserve Bank of Australia Deputy Governor Ric Battellino is making a speech at a Banking Conference in Sydney. Any statements about monetary policy in Australia may see the FX markets moving the AUD. The Westpac Consumer
Confidence Index is expected to rise due to cuts in the Official Cash Rate last week. Regional equity markets will also provide some direction for the AUD and should the Chinese markets have yet another negative day today (off nearly 3% so far this week), that will also place the AUD under some selling pressure.
Majors: So we had the FOMC members describing the US economy as "expanding moderately" whilst highlighting the ongoing risks associated with the European debt crisis. Despite US Data improving, the Fed did restate its pledge to keep rates on hold til mid-2013.
That will make it a staggering 5 years of zero interest rates! What times we live in. The markets are of the belief that after the January meeting, the Fed will announce a "broader overhaul" of their strategy for communicating policy with the public and is likely to include more detail on goals for unemployment.
Interestingly in Europe, European regulators will make banks increase core capital to 9% by June 2012 instead of 2019, and this
has precipitated some to exit profitable operations outside their home markets. China's leading index is due today while Italy has a EUR3bn auction of 5-year bonds and Germany EUR5bn of 2-year notes to sell. In the UK, we await unemployment data and the US has mortgage applications.
Economic Calendar
14 DEC AUS Westpac Consumer Confidence Dec
EU Euro Zone Ind Production Oct
US Import Price Index Nov