Australian Dollar Outlook - 26 April 2013
Bell FX Currency Outlook: The Australian Dollar is sitting just south of USD 1.0300 this morning which is slightly higher than where it was trading at local close of business on Wednesday.
Australia: The AUD, CAD and NZD are all higher this morning after an overnight session which saw European and US stock markets trade slightly higher.
On commodity markets, iron ore fell 0.4%, WTI oil was higher, LME Base metals strengthened 1.8% and soft commodities were mixed.
On Wednesday, Australian Q1 CPI inflation printed a little below market expectations. The general view is that the inflation data is
consistent with the RBA's easing bias but it did not necessarily increase the chances of a near-term rate cut.
Also on Wednesday, RBA Deputy Governor Lowe said the RBA plans to hold ~ 5% of its foreign exchange reserves in Chinese bonds, which is consistent with the rising importance of China for Australia.
In Australia today, the only economic release of interest is the NAB Quarterly SME Business Survey. There may be some testing of the AUD's levels through the AUD/NZD cross with the New Zealand March trade data.
Also in our time zone is the latest BoJ meeting outcome although the market is not convinced any further policy measures will be announced (especially in light of the recent launch of the 'QQME' programme earlier this month).
The main focus leading into the weekend is tonight's first estimate of Q1 GDP. We expect a subdued day in the
markets with the AUD trading in a narrow band on either side of 1.0300.
Majors: The main mover and shaker in the currency markets overnight was the GBP. Better than expected UK GDP figures confirmed a "tripledip" recession was avoided (at least on the preliminary estimate).
This news boosted the Sterling by 1% against the USD and it enjoyed similar gains on some other cross rates. Incoming US corporate earnings,accompanied by heightened expectations for a further ECB policy easing next week all contributed to a 'glass half full' market mentality.
As stated above, the main focus leading into the weekend is tonight's first estimate of Q1 GDP. Given the softness in incoming data towards the end of the quarter and early April, attention may focus not so much on the headline print (expected at 3.0% annualised) as the number for 'Final Sales of Domestic Product'.
There is also the final reading for University of Michigan's consumer confidence, which is expected to improve to 73.5 from the 72.4 earlier estimates.
Economic Calendar
26 APR JN Apr CPI
CH MNI Business Sentiment Indicator
US GDP QoQ (annualised)