Australian Dollar Outlook - 21 January 2013
Bell FX Currency Outlook: The Australian Dollar has weakened slightly in Friday's night trade and opens up this morning around the 1.0500 level.
Australia: Although the eagerly anticipated Chinese Q4 data that was released at midday on Friday was in line with expectations, the AUD looked fatigued from its recent push higher.
China's GDP for the last quarter came in at 7.9% y-o-y which was a touch over the 7.8% level predicted and better than the 7.4% figure in Q3. Industrial production and retail sales in December also slightly exceeded the predictions with a figure of 10.3% (versus 10.2% expected) and 15.2% (15.1% anticipated) and were higher than November's figures.
The AUD traded in a tight range touching again below 1.0500 but without much conviction as markets were in general quieter.
Equity markets in Europe were mixed while the US markets continued to grind higher as better than expected results from General Electric and Morgan Stanley helped the major indices stay at 5 year highs.
We expect a tight trading range today in Australia since the US market will be celebrating the Martin Luther King holiday and all markets will be closed. By coincidence President Barack Obama will also be inaugurated for his second term later today in Washington.
This is a light week for data in Australia with the Q4 CPI due out on Wednesday with the market predicting an unadjusted rate in the range of 0.4%-0.5% which should result in an annual rise of 2.5%, which is the RBA's target rate.
Majors: The US University of Michigan's consumer confidence survey for January printed lower than expected at 71.3 which is lower than last month's at 72 and well below the prediction of 75.
With the recent good run of economic numbers from the US of late, especially relating to housing, it was thought the index would have been higher but issues with the fiscal situation in Washington and the end of the payroll tax reduction for all workers on January 1st is thought to have affected the result.
On the political side in the US, House Republicans have said they will introduce a bill to raise the debt ceiling for another three months without requiring any cuts in spending.
Tomorrow the Bank of Japan meets and the market will be watching closely to see if their attempts to further weaken the JPY will continue.
On Wednesday the Bank of Canada meets and no change in their cash rate of 1% is anticipated. On Thursday we will see some flash PMI data from China.
Economic Calendar
21 JAN US Public Holiday
NZ Public Holiday
GE Producer Prices (PPI)
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