Bell FX Currency Outlook: The Australian Dollar is
slightly stronger this morning, currently trading at
USD1.0250, as investors digest the US Fed Minutes and
news that Spain has added additional deficit-reduction
Australia: The AUD did manage to hit USD1.0283 overnight early in the
trading session, but later paired back as the Fed's minutes were released.
The minutes from the June meeting showed that officials were divided
over the timing and the necessity of more stimulus, indicating that the Fed
was in no immediate rush to launch another round of bond buying to
stimulate the economy. It is expected that another round of quantitative
easing will only occur 'if the economic recovery were to lose momentum'.
So without any confirmed assistance for the US economy, many of the
riskier currencies lost some ground to the USD. The one currency cross
that continued to make serious gains was the AUD/EUR. Overnight it rose
to an all-time high of EUR0.8378, and is currently not far off these levels.
Should the uncertainty in the Euro-zone continue, and weakness in the
EUR/USD, then it's likely that we could see the AUD/EUR continue to
break records. Today during our trading session the focus will be on the
employment data, due for release at 11:30am (AEST). Most are
forecasting that there will be no jobs growth in the month of June, and the
unemployment rate will increase from 5.1% up to 5.2%. Should the data
vary from expectations in a positive way, then we could see the AUD
break through the upper level resistance of USD1.0300.
Majors: Equity markets in the US continued to disappoint, posting their
fifth down day in a row. The DOW was down 0.4% and the Nasdaq down
0.5% following the release from the Fed. European equity markets were
fairly quiet despite comments regarding Spain's austerity measures.
Germany's DAX posted a small gain and was up 0.2% while the FTSE100
was broadly unchanged. Overnight Spain's Prime Minister Rajoy unveiled
an additional EUR65bio of deficit reduction measures in the hope to cut
Madrid's budget deficit through to 2015. New tax hikes and spending cuts,
including a reduction in unemployment benefits and pensions were part of
the program. While this is a step in the right direction, many believe that
Spain will still require a bailout. This as well as the announcement from the
Fed saw the EUR/USD fall to a two year low, dropping to USD1.2212.
While it has since recovered a little, given the trend in the last few weeks,
further downside is a very likely scenario.
12 JULY AU Employment Data
AU Consumer Inflation Expectations
US Initial Jobless Claims
US Fed's Lockhart and Williams speeking
Gold Price Reflects Dampened Expectations in Europe
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