Australian Dollar Outlook – 3/6/2013

Bell FX Currency Outlook: The Australian Dollar has mostly held its ground against the US Dollar, getting support from decent economic indicators here and abroad and also from yesterday's RBA interest rate announcement.

Australia: Currency markets traded pretty much within recent ranges despite a strong showing in global equity markets overnight. The markets saw the Dow Jones Industrial Average rise 1% to a new record high, surpassing the previous October 2007 level of 14,015. Better than expected US nonmanufacturing ISM data helped things along, complementing other recent US data and which is playing to the view that the Fed's spending will continue for a long while. Yesterday's statements by outgoing Chinese Premier Wen that China plans to hit a 7.5% growth target this year with inflation targeted at 3.5% has generally been viewed as supportive for global growth prospects. What we have seen then since the dip in the AUD/USD on Monday is that the USD is softer against just about every G10 currency, with gains led by AUD and NZD.

For the AUD, this could mean a revisit of the 1.0300 level, which will disappoint exporters who held off from getting involved in the dip. With the RBA done and dusted for another month, the Banks' forecasts imply quarterly growth of about 1%which is a weaker outcome than expected.

Australian retail sales for February were up 0.9% which came in higher than expectations and provides the view that contraction in this important sector of the Australian economy might be over.

Today's Q4 GDP reportat 11:30AEST will be interesting, with expectations of a 0.7% print for the December quarter and 3.1%

.In conclusion, should the RBA's forecasts be accurate, expectations will remain intact for future easing(s)and this in turn may halt the AUD's current appearance of wanting to stay firm against the Greenback. Majors:The main interest from here is tonight's US ADP employment report, albeit this has a less than stellar track record of predicting the ensuing non-farm payroll report due on Friday. Consensus here is for a rise of 170k.We also get the Fed'slatest Beige Book prepared for the 20-21 March FOMC meeting and the Bank of Canada's latest policy decisionwhere there is an expecation of "no change" to 1% but with the market on guard for further lessening in the BoC's tightening bias.

ECONOMIC CALENDAR

06 MAR AU Jan Trade Balance AUDbn

JP NOJ Target Rate

EU ECB Announces Interest Rates

UK BOE Policy Decision

US Jan Trade Balance $bn

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