Australian Dollar Outlook – December 15, 2014

A man counts U.S. dollars at a currency exchange office in central Tripoli, June 3, 2014. Libya's currency is under heavy pressure as a breakdown in security and a collapse of oil revenues due to port blockades have badly disrupted public finances and an economy already burdened by exploding state salary and subsidy bills. REUTERS/Ismail Zitouny (LIBYA - Tags: POLITICS BUSINESS)

Bell FX Currency Outlook: The Australian Dollar has opened trading this morning in the mid .8200's after another day of weaker commodity and equity markets on Friday.

Australia: Although the USD has retreated ahead of this week's upcoming US Federal Reserve meeting, the AUD as well as other commodity currencies remain weak as commodity prices continue to weaken and equity markets soften. Over the weekend the Australian Treasurer Joe Hockey said that forecast revenue in this year's May budget will fall short of expectations by AUD6-7bn for the fiscal 2014-2015 year. He also said the government's goal of having a balanced budget by 2017-18 will not happen in that time frame. Unemployment is expected to rise above the 6.25% level and the government announced as many as 175 government agencies will be cut in the future. At 12:30 AEDT today we will see the Mid-Year Economic and Fiscal Outlook released by the government. We expect the weak tone of the AUD will continue today and do expect any wild swings in our local currency.

Majors: It looks like the Shinzo Abe led LDP party will be returned to power in Japan after elections this weekend with an increased majority. Most analysts expect the returned government will continue with their

stimulative tactics to further weaken the JPY and grow their economy. The Paris based International Energy Agency has cut their global oil demand projections by 230k barrels per day to 900k per day for 2015.

Adding to the negativity in oil markets the UAE said OPEC would not cut production even if prices fell to USD40 a barrel. In the European area, industrial production rose 0.1% mom and 0.7% yoy for October which was in line with predictions. Analysts expect the ECB will embark on more quantitative easing in the near future. In the US, the University of Michigan first read of consumer confidence for this month saw the index jump from 88.8 last month to 93.8 which is higher than the 89.5 figure expected. PPI figures for November in the US revealed no increase mom and only a rise of 1.4% yoy. All eyes and ears are focused on the US Federal Reserve meeting later this week for further clues on when interest rates in the US will start to rise.

Economic Calendar

15 DEC AU Federal Govt. Mid-Year Economic and Fiscal Outlook

US Empire Manufacturing

US Industrial Production MoM

CA Existing Home Sales MoM

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