Australian Dollar Outlook – 9/6/2012

Bell FX Currency Outlook: The Australian dollar still remains under pressure, trading under 1.0200 as iron ore prices continue to weaken.

Australia: The Australian dollar has fallen close to two month lows overnight trading down to 1.0168 prior to speculated reports that the ECB would announce a bond-buying plan was leaked ahead of their key policy meeting tonight. The currency saw a short lived rally in yesterday's session before drifting lower as Domestic GDP growth remained solid and rose broadly in line with expectations. The Quarterly outcome was slightly weaker than expected at 0.6% vs 0.8% although growth over the year was as expected at 3.7%. Today will see the release of the Australian employment data at 11:30am. A slight rise in the unemployment rate is expected to 5.4% from a previous 5.3% in August in line with shrinking job ads figures in recent months. Short term will see AUD weakness continue with a potential bounce tonight should we see some positive measure from the ECB.

Majors: Market sentiment was buoyed overnight as reports the ECB will announce a bond-buying plan at its meeting tonight. The news helped push Italian and Spanish bond yields lower, despite the reports being later contradicted. Equity markets struggled to make headway with European equities ending the session mixed and US Equities ending the session broadly unchanged. The German DAX rose 0.5% to 6,965 whilst the FTSE declined 0.2% to 5,658. The S&P 500 closed modestly lower after reaching its highest intra-day level in four years at 1,403, with the DDJIA rising 0.1% to 13,047. Oil prices were mixed with WTI rising 0.6% to USD$95.9 per barrel and Brent falling modestly to USD 113.6 per barrel. Base metals finished the session mostly higher while gold ended down 0.1% to be trading at USD $1,693 per ounce. Tonight will see a raft of data released in both Europe and the US so should make for an interesting session.

Economic Calendar

ECONOMIC CALENDAR:

06 SEPT AU Unemployment Data

EU Euro-Zone GDP

EU Draghi Speaks

US Initial Jobless Claims

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