Australian Dollar Outlook – December 17, 2014

Passers-by are reflected on a signboard displaying currency signs outside a bank in Tokyo November 27, 2014. The dollar edged down against the yen on Thursday after lacklustre U.S. economic data pushed Treasury yields lower and dulled investor appetite for the greenback. REUTERS/Issei Kato (JAPAN - Tags: BUSINESS EMPLOYMENT)

Bell FX Currency Outlook: The Australian Dollar is unchanged from this time yesterday, having given back some overnight gains as volatility increases in global markets.

Australia: It was a volatile night for markets as crude oil prices continued to decline and we saw a number of important data releases out of Europe and the US. The AUD was quiet during trading yesterday, with the RBA minutes bringing no great surprises. The Bank continues to see a period of stability in rates as the most prudent course of action, while also making further comments on currency overvaluation, stating that "further exchange rate depreciation was likely to be needed to achieve balanced growth in the economy." Even a surprisingly weak HSBC flash manufacturing PMI number (49.5 vs. 49.8 expected) had little impact. The

AUD traded up to 0.8270 overnight as the USD saw some selling, but has mostly given these gains back and is currently trading around yesterday's levels of 0.8220. Today sees no major data releases in Australia.

Majors: Russia's central bank unexpectedly raised its key interest rate to 17.0% from 10.50% in an attempt to halt the slide of the RUB, which lost 11% on Tuesday. However this was to no avail as the currency dropped a further 9% against the USD and is now down 52% this year. The JPY advanced to a four-week high against the USD as the tumbling Russian ruble added to deepening concern that the global economy is faltering, boosting haven demand and seeing long USD positions being unwound. The JPY is currently trading around 116.50, having been down into the 115s last night. The EUR is trading higher against the USD this morning on the back of some good data. The euro area composite flash PMI was stronger than expected, while in Germany there was a solid improvement in the December ZEW survey, with the expectations component rebounding to +34.9 from +11.5, and the current situation component rising modestly to +10 from +3.3. In the US housing starts and building permits both declined for the month, adding to pressure on the USD. The GBP is also stronger against the USD despite UK core CPI being below expectations. The GBP was quickly sold following the release of this data, but then almost as quickly reversed and finished 0.6% higher for the day. It should be another big night for data releases with Bank of England minutes, UK unemployment numbers, Eurozone CPI US current account balance and the all-important FOMC rate decision.

Economic Calendar

17 DEC UK Bank of England Minutes

US FOMC Rate Decision

EC CPI YoY / Core YoY

US Current Account Balance

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