Australian Dollar Outlook - 17 September 2014

US Dollar: Way to Majesty and Honor in Society — Money is the primary thing to consider one’s status in the society; when someone work hard more, he gets more paid; those who feels more bitterness on the way to accomplish his career goal, enjoys unlimited sweetness of achievements. CREDIT

Bell FX Currency Outlook: The Australian Dollar starts the day just below .9100 after its brief flirtation with the sub .9000's as the speculation increases about the language that will accompany the FOMC announcement early Thursday morning Australian time.

Australia: The AUD has moved higher overnight after more opinions were voiced that the US Federal Reserve will leave interest rates at lower levels "for a considerable period of time". The article in the Wall Street Journal that the market may be underestimating the timing of rate increases helped buoy the AUD overnight and the major US share indices rose as well. Yesterday we saw the release of the RBA minutes from earlier this month and any chance of a possible rate cut were dashed as the central bank said rates would be stable. The RBA did express concern on the weakness in the Chinese housing market could spill over into other sectors of the Chinese economy and thereby hurting growth and putting the projected rise in annual GDP of 7.5% at risk.

Coincidentally, the PB of C announced late yesterday afternoon an infusion of RMB500bn in liquidity to the top five banks in China. The RBA also expressed concern on the recent rise in housing prices in Australia. China announced that that there would be a ban on imported coal that had an ash component higher than 16% and a sulphur content more than 1%.

This may raise the costs of Australian exporters who may have to wash or blend their coal to a greater degree. The direction of the AUD in the next 24 hours will be guided by the language from the FOMC meeting that concludes at 4.00am AEST Thursday morning.

Majors: Most analysts expect the reduction in the bond buying exercise by the US Federal Reserve of USD10bn per month will continue. Overnight in the UK, inflation figures for August were in line with expectations where the CPI rose 0.4% mom and is higher by 1.5% yoy. The Bank of England is keen to keep these figures under 2%. In the Eurozone investor expectations weakened. In Germany the index fell from 44.3 to 25.4 while the wider Eurozone fell to 14.2 from 23.7 previously. US producer prices were in line with predictions and rose only 0.1% mom and core PPI has reduced to 1.8% yoy. Tonight we will see the latest Bank of England minutes. The FOMC rate decision and announcement has pushed the Scottish referendum on Thursday to the second page but its result could have implications for the EUR.

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