Australian Dollar Outlook – December 11, 2014

U.S. one-hundred dollar bills are seen in this photo illustration at a bank in Seoul August 2, 2013. Picture taken August 2, 2013. Reuters

Bell FX Currency Outlook: The AUD has not broken new ground. Having pushed down to 0.8265 after a lower-than-expected Chinese CPI print, it recovered to 0.8348 before pulling back to 0.8300 this morning.

Australia: Despite a selloff in the USD, the AUD failed to rally. The deterioration in risk appetite, together with continued weakness in commodity prices is dominating the AUD at the moment. For the AUD to stabilise we will need to see some improvement in local data, and today's employment number at 11:30AEDT will be important in this regard. While there was a rise in total employment in October, heightened volatility in both part-time and full-time employment in recent months means some statistical payback looks likely in November. And while this total employment outcome would still undershoot what other labour market indicators are suggesting for employment growth, it would at least be a modest step in the right direction.

Majors: The RBNZ left the cash rate unchanged as widely expected. While acknowledging that further hikes will be "required at a later stage", the RBNZ also acknowledged that the "expansion can be sustained for longer than previously expected with a more gradual increase in interest rates" given subdued inflationary pressures. The currency remains in focus, with the NZD "unjustifiably and unsustainably high" and not reflecting the decline in commodity prices this year. USD/JPY has had one of the largest one day pull backs in recent times as JPY attracts a safety bid, as a result AUD/JPY is consolidating below 100. Crude oil prices declined to fresh five year lows as OPEC cut its 2015 demand forecast to 28.92 mbbls/day. Kuwait discounted its sell price to the Asian market, the largest discount in six years. OPEC produced 30.56 mbbls/day in November, exceeding its collective target of 30 mbbls/day for the sixth successive month. The decline in price was further supported by EIA reporting a gain in USA crude inventories by 1.5 mbbls/day last week.

ECONOMIC CALENDAR

11 DEC NZ RBNZ Official Cash Rate Dec

AU Unemployment Rate Nov

GE CPI Nov

US Retail Sales Nov

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