Australian Dollar Outlook 4/11/2011
Australia: A lack of data released overnight saw the AUD follow the moments of the equity markets and commodities. Oil was the major commodity to post a decrease with the price falling 3.6% to close at USD108.72. The fall came after the price of oil hit a 30month high yesterday. Overnight the IMF warned that the higher oil prices could seriously damage the global economy.
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Reports out of Libya can also explain the drop in prices after it stated that Gaddafi has accepted a 'road map' to a ceasefire from a delegation of African leaders. And although the rebel leaders rejected the proposal as it didn't result in Gaddafi stepping down, it has given the global economy hope that the oil exporters will resume once the fighting stops.
US equity markets were also slightly weaker overnight as investors take their positions prior to the US earnings season which starts this morning with Alcoa's profit results. Today locally we have the release of the NAB business confidence. After a high result last month, today we could see a pull back as businesses digest the spate of recent natural disasters as well as the higher AUD.
Majors: The IMF released updated forecasts overnight which didn't see any improvements in their expectations for global growth. For 2011 and 2012 growth in the world economy is expected to be 4.4% and 4.5% respectively. While the global growth figures weren't changed, there was a slight downgrade in the US growth for 2011 with it expected to grow around 2.8%.
Looking at the other major crosses, the EUR/USD looks like it has stalled ahead of a raft of data due out later this week. Germany's ZEW confidence survey is due out this evening, as well as the UK CPI data. US retail sales and a large amount of Chinese data due later in the week could also see the EUR/USD to push through its recent barrier of USD1.4500.
The GBP/USD weakened overnight as investors wait for tonight's CPI data release for March. With the European Central Bank increasing their interest rates last week, the markets are waiting to see whether the Bank of England may have a case to head down the same road in the near future. The GBP/USD opened this morning at USD1.6340.
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