Australian Dollar Outlook - 25 February 2013
Bell FX Currency Outlook: The Australian Dollar opened this morning above 1.0300 but has since fallen to similar levels seen at
the end of last week.
Australia: With the AUD bouncing back above 1.0300 after RBA Governor Stephens' comments on Friday, the AUD has moved lower this morning as major equity markets were generally firmer in both Europe and the United States on Friday.
After better than expected data from Germany and continuing better than expected earnings reports from the US, especially from Hewlett Packard and Texas Instruments, equity markets all advanced with the Dow again touching the 14,000 level.
For our local market the release of the HSBC flash manufacturing PMI data for China for the month of February around midday today will be closed watched for further indications on how the Chinese economy is travelling.
The NSW government will also release an economic update on the state of their finances. Movements in the AUD are likely to be driven by offshore factors although we expect the trading range over the next several days to be in fairly tight range unless the Chinese PMI data today provides a surprise.
Majors: Although most eyes are focused on the Italian elections, early results will not be filtering in until later today and tonight. Most analysts expect that a coalition government will be formed. Cyprus also held an election this weekend.
The German IFO business survey or February on Friday revealed some better results than expected which helped equity
markets move higher. The GBP continues to be under pressure as Moody's downgraded the country sovereign debt to Aa from their previous Aaa rating.
Interestingly, Australia is now the third largest Aaa bond market in the world after Germany and Canada. The weak tone of the
JPY looks like it is set to continue with reports that the next governor of the Bank of Japan is likely to be a noted dove, Asian Development Bank President, Haruhiko Kuroda.
Tomorrow night we will hear Federal Reserve President Bernanke testifying at the US Senate Banking Committee. The market will look for more hints on the future path of further QE stimulus.
As we saw last week, some dissension among the Federal Reserve presidents on the benefits and future quantity of
continued stimulus may provide some surprises to the market.
In the background the prospect of automatic budget cuts in the US due to start on March 1 may also have a short term impact on financial markets.
Economic Calendar
25 FEB CH HSBC Flash Manufacturing PMI
IT Parliamentary Election
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