Australian Dollar Outlook 24/02/2011
Australia: The Australian Dollar has opened unchanged from late yesterday, despite the developments in the Middle East, which is weighing heavily on risk tone and associated risk asset classes.
Oil prices have surged and this is weighing on commodity currencies and global stock markets are paring back recent gains on their respective indices.
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In Libya, Muammar Gaddafi is taking to the demonstrations ruthlessly which in itself is not a surprise and resulting in significant casualties.
Oil prices have risen, with Nymex futures closing on US$100 per barrel, the highest level since the GFC took real hold in September 2008.
Gold rose as safe haven assets were bid, and interestingly, the USD was sold off, which is not normally the case in safe haven environs. The difference this time is the US reliance on oil.
So a key and different twist may be emerging in currency markets and as long as the tensions remain in the Middle East, this trend seems set to continue. High oil prices threaten the recent confidence in retail sales and consumer spending.
Literally, never a dull moment these days and our AUD is as poised as ever to move either way and could so meaningfully and quickly.
The Capes report is due in Australia today with an update on investment in Q4 and expected investment for the year ahead.
Majors: Christchurch's latest earthquake is more devastating than September 2010's quake with its epicentre much closer to the city.
Tragic circumstances and our thoughts are with all. All stock markets fell overnight, as nervousness invaded the psyche of investors.
US bond process fell, however, as the Fed's Prossser said an early end to QE2 might be wise to limit inflation pressures.
Simultaneously, Bank of England Minutes showed 3 of 9 Committee members favoured a rate hike and the first hike is expected in May.
Hawkish ECB sentiment was a large driver of currency trade last night with the USD's loss of saven haven status for now.
US has Durable Goods orders, a measure of investment in the America and new Home sales and prices.
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