Australian Dollar Outlook – 5/15/2012

Bell FX Currency Outlook: The Australian dollar falls below parity, as investors seek the safe haven US Dollar.

Australia: Global stock markets fell overnight as Greek woes continued to plague markets. Data pointing to perhaps a deeper European recession, along with concerns of a disorderly Greek exit from the euro saw equities and commodities lower. Commodities and the Aussie were seemingly hardest hit extending their slump as investors sold off in favour of safety. The Aussie dollar fell across the board continuing its slide against the Greenback to open below parity this morning. The local unit is also trading at a four month low against yen and a seven month low against the pound. Signs the Chinese economy is cooling further added to the Aussie's troubles as China cut bank reserve requirements over the weekend in a bid to avert a sudden slowdown. The US dollar is expected to remain strong in the short term unless some sort of resolution in Europe can turn markets around. In Australia today, the RBA meeting minutes will be released at 11:30am. With the statement already released, nothing new is expected although markets will look for any further hints of rate cuts.

Majors: Weak European industrial production added to market concerns overnight, sparking a broad selloff in risk assets. European shares closed 2% lower at a 4 ½ month low and Wall Street ended the session 1% lower at a three month low. With Greece no closer to forming a Government, the debate between austerity and growth looks set to take centre stage. The ongoing uncertainty in Greece put downward pressure on commodities with gold falling 1.4% to USD 1557.33 an ounce. Oil prices also fell with WTI declining 2.2% to USD 94.06 and Brent falling 1.2% to USD 110.96. Metals also finished the session lower with Copper also falling 2.2% to USD7840. Tonight will see US Retails sales figures released in the States.

]

ECONOMIC CALENDAR:

15 MAY AU New Motor Vehicle Sales

AU RBA Board Minutes

EU Euro-Zone GDP

US Retail Sales

[Kick off your trading day with our newsletter]