Australian Dollar Outlook - 16 September 2014

Euro and U.S. dollar banknotes are seen in this picture illustration taken in Prague January 23, 2013. Credit: REUTERS/David W Cerny REUTERS/David W Cerny

Bell FX Currency Outlook: The Australian Dollar back above USD 0.9000 as markets count down to the FOMC announcement on Thursday morning.

Australia: The AUD has recovered a bit of ground, after yesterday falling below .9000 for the first time since mid-March. Helped by some weakness in the USD, the AUD hit a high of 0.9049 overnight and is near 0.9030 this morning. The move higher was also supported by some strength in the iron ore price, which rose 3.9% to $85.20/t. It's a busy morning in Australia today. ANZ-Roy Morgan weekly consumer confidence is released at 9.30AEST, RBA Assistant Governor (Economic), Christopher Kent, speaks at the Bloomberg Economic Summit at 10.00AEST and the minutes of the RBA September Board meeting are published at 11.30AEST. The Minutes are expected to reiterate the slightly more upbeat tone on the domestic economy conveyed in the post-meeting statement highlighting the improvement in non-mining business investment plans and business confidence. They may also provide further insight into the Board's concerns about the Chinese property market.

Majors: Overnight, the USD lost ground after industrial production surprised with a fall of 0.1% in August (+0.3% expected) while July was revised to +0.2% from +0.4%. Motor vehicle production fell 7.6%, although there may have been some issues with the seasonal adjustment of this component. Tomorrow morning's dairy auction will be important for the NZD, and we expect further price weakness. In Europe, the Eurozone trade surplus was the second largest on record, at EUR21.2b, suggesting some caution is required on further euro weakness.

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