Australian Dollar Outlook 17/12/2010

Australia: The Australian dollar has opened slightly higher this morning, regaining ground lost late in the offshore session.

More positive data in the US overnight saw the AUD pullback to USD0.9845 after initially creeping higher early on the session.

In the US, jobless claims fell for the sixth consecutive week and the Philadelphia Fed manufacturing survey showed a surprise
improvement in December.

The US data pointed to signs of an improving economy.

The AUD has slowly made up ground towards USD0.9900 this morning as US equity markets finished slightly higher. Markets will now focus on Tuesday's release of the minutes of the Reserve Bank of Australia's December board meeting.

The AUD is expected to trade within recent ranges as liquidity continues to diminish as we approach Christmas.

Majors: The EUR rose marginally higher Thursday as traders awaited further details from a European Union summit that might indicate a permanent solution to the euro-zone's debt crisis.

In Brussels, a German government source told reporters that the EU leaders had agreed in principle to amend the E.U treaty in order to
create a permanent stability mechanism that would allow governments to safeguard the EUR in the event of a crisis.

Europe's leadership is meeting for a two-day summit that comes on the heels of a warning by Moody's Investors Service that it may downgrade Spain's sovereign credit rating.

It's a big deal to the market as they look for assurance that euro-zone governments are willing to take aggressive measure to address the structural flaws that currently undermine the EUR.

Markets will be jittery going into the 2-day summit and with thinning trading conditions moves look to be choppy for the time being.