Australian Dollar Outlook - Feb. 22, 2016

Bell FX Currency Outlook: The Australian Dollar bounced 80 points from its Friday night low as the USD lost ground in late session trading.

Australia: The AUD is trading just below 0.7150 this morning, with a weaker USD on Friday night reversing the losses the AUD suffered during Friday afternoon trading. The RBA’s John Edwards was the catalyst behind the AUD dropping back below 0.7100 after the Wall Street Journal reported that Reserve Bank of Australia board member John Edwards said the currency was too strong. The Aussie "has found a base, and I guess I would say I still think it is a bit too high," Mr. Edwards is quoted as saying in the report. Edwards also said he would be more comfortable with a level around 65 US cents, though he's not confident a drop to that level would occur. A better than expected US CPI figure pushed the AUD down further, touching a low of 0.7068 before, recovering back to current levels as the USD sold off against the majors (on light volumes) during afternoon trading in America. There are no data releases of note today but later this week the Australian Capex numbers will be closely watched.

Majors: The USD extended its decline against the yen Friday, logging its worst three-week stretch against the Japanese currency since June 2013. The dollar is down 7.1% vs. the JPY since the start of the month as
concerns about global growth and market volatility linger. As stated above, firmer-than-expected US CPI data initially saw the USD strengthen before most gains unwound in the NY Friday afternoon session. The EUR also strengthened against the USD Friday but failed to unwind a sharp drop from earlier in the week. It finished the week down 1.1% against the greenback, snapping a two-week winning streak. The GBP lost some
ground before negotiations on the conditions for the UK to remain in the European Union were eventually concluded with a deal reached. UK Prime Minister David Cameron has subsequently called a referendum for
23 June. In commodities markets crude oil prices fell, continuing to give back recent gains. The lack of commitment from some OPEC members on a production freeze remains the key headwind short term. Tonight looks to be relatively quiet with only PMI figures out of Europe and the US the only data of note. Later in the week there are a few US data releases, including durable goods and GDP. Also of note is the G20 summit which commences in Shanghai on Friday.

Economic Calendar 22 FEB

• JN Nikkei Japan PMI Mfg Feb
• AU RBA’s Debelle Speech at Kanga News DCM Summit
• US Chicago Fed Nat Activity Index Jan
• US Markit US Manufacturing PMI Feb

Bell Fx

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