Australian Dollar Outlook - 14 August 2013
Bell FX Currency Outlook: The Australian Dollar is slightly lower at USD 0.9100 after the Greenback was boosted by positive US retail sales data that sustained speculation the US Federal Reserve will begin tapering soon.
Australia: The US Dollar traded higher against all major currencies after the release of US retail sales showing growth for the 4th consecutive month.
Core retail sales, which exclude the volatile car, gas and building supply categories, rose 0.5% in July after a rise of 0.1% in May and 0.2% in June.
It is becoming more apparent the market believes the stream of economic data is showing consistency and this will most likely lead to strength in the USD. Yesterday's soft NAB July business survey was also weighing on the AUD.
Business conditions remain at four-year lows, while low interest rates and the falling AUD is taking time to boost confidence,
which was at an eight-month low. There are more important Australian economy signposts today though they may not trouble the AUD too much which has been relatively contained in the past 24 hours.
Today's Q2 wage price index is predicted to be 0.7% (same as Q1).
Tonight's focus will be on key French, German and EC Q2 GDP, with France and the Eurozone expected to return to growth, while Germany's GDP is tipped to pick up from last quarter's 0.1% to 0.6%.
In the US it's the latest weekly US MBA mortgage applications data that's showed some recent cooling in mortgage flows. PPI is also due ahead of CPI tomorrow night, that important for Fed tapering expectations.
The UK July labour market report is tipped to show further incremental improvement.
Majors: USD/JPY rose yesterday after Japanese PM Abe was reported as asking for a study into lowering the corporate tax rate, lifting the Nikkei by 2.6% and USD/JPY from 96.5 to 97.75, before rising above 98 overnight against the backdrop of a somewhat stronger USD.
As the US session unfolded, some new support for the USD emerged as written above. Later in the session, Atlanta Fed President Lockhart (non-voter, dove) was talking tapering as "soon", a now familiar theme, talking about "a decision
to proceed, whether it be September, October, or December, ought to be thought of as a cautious first step".
He said he "wouldn't rule out September at all". His comments failed to spur the USD further but did see Treasury yields rise, the 10 year to 2.72%, within sight of a recent 2.75% high. US stocks though closed higher, even after a rocky start, seemingly unfazed by more tapering talk.
Economic Calendar
14 AUG AU Westpac Consumer Confidence Aug
AU Wage Cost Index Q2
CH Foreign Direct Investment y/y Jul
EU GDP Q2
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