Australian Dollar Outlook: 30 January 2012
Bell FX Currency Outlook:
The Australian Dollar remains fairly much unchanged after a choppy session offshore which saw a fall in US equity markets as the benchmark Dow Jones ended down 0.58% to 12,660 points.
Australia: Slightly weaker-than-expected US Q4 GDP stalled the AUD as the markets showed their disappointment after a series of good releases recently.
The US economy notched up its 10th quarter of uneven growth, growing by 2.8% annualised in Q4 (up from 1.8%). The market was expecting 3.0% and so the result was below expectations as was the detail.
This "setback" was tempered slightly after the US administration announced it will relax rules on the Home Affordable Modification Program (HAMP) allowing Fannie Mae and Freddie Mac to forgive debt on homes that have fallen in value.
Oil experienced a mixed session, as the US GDP result was weighed against possible supply disruptions from the Middle East.
Gold continued its recent rally supported by expectations US interest rates will stay low. Base metals were lower underpinned by the GDP result, and soft commodities also closed broadly lower.
This week Australia releases data on December house prices, credit growth and a private sector survey of business confidence, all of which will be closely watched.
Also in Asia the Chinese come back from the lunar new year, with the USD/CNY fix expected to be lower following a weaker dollar over their holiday period. There is no Australian data for release today.
Majors: EUR/USD rallied as hopes increased for a solution to the restructuring between Greece and its creditors with word the parties were close to a deal. However, the more significant development was that Greece rejected a proposal for her budget to be controlled by the Eurozone commissioner. Apart from potentially disrupting the next Greek debt payment, this may also represent a precedent in the quest for euro-zone leaders to form a fiscal compact. Elsewhere USD/JPY continued to fall following the breach of long-term upside technical resistance, potentially signalling a false break.
Further out, the euro-area situation feels ripe for further developments, which on balance are likely to disappoint already high market hopes and thus prove currency negative which may lead to pressure on the AUD. Tonight sees Euro-zone confidence indicators, German retail sales and US personal income and spending for December.
The real focus tonight though will likely be on a EU Summit supposedly to sign off on the Greek debt restructuring, paving the way for the €130bn further bail-out package agreed last October.
Economic Calendar
30 JAN EU Italian Bond Auction
GE Retail Sales
US PCE Core
US Personal Spending