Australian Dollar Outlook - 07/31/2012

Bell FX Currency Outlook: The Australian Dollar edged even higher overnight posting a fresh high above 1.0500 against the US Dollar.

Australia: Most currencies were relatively unchanged overnight ahead of major central bank meetings and key data releases later this week, but as stated above, despite pretty quiet conditions, the AUD found a way to edge higher again.

The main reasons behind the wind in its sails centre with the ECB President's commitment to support peripheral euro area government bond markets. So in what has been a significant few days, we have the Fed Reserve, ECB and Bank of England policy meetings this week with expectations for constructive policy announcements.

Fair to say there is optimism (with a touch of caution) in the near-term. Today in Australia, private sector credit, building approvals and new home sales for June are released. Building approvals for dwellings are expected to have decreased sharply following the very strong increase in May (which was boosted by the component for apartments).

Private-sector credit is expected to have increased by a modest 0.4% m/m in June, driven by modest rises in housing and business credit. AUD is just under 1.0500 and we feel the AUD will most likely rest a bit for the next day or so with a chance of some pull back to the low 1.0400's.

Majors: US markets were little changed overnight, taking a breather after the strong rally in recent days and ahead of the key central bank meetings and economic data later this week.

European markets continued their gains amid ongoing speculation that the ECB will take action to ease the debt crisis, largely dismissing the weak run of European news overnight. US equity markets were little changed overnight base metals were mixed with copper down 0.3% but nickel up 2.3%. Gold is up 0.2% to $1621/oz.

Wheat up 1.8% and Cotton down 0.2%. In India, the central bank is expected to keep interest rates unchanged. In Europe, July CPI and June unemployment are due, while in the US there is plenty of data released tonight being personal income and spending, house prices, consumer confidence and the Chicago and Milwaukee manufacturing PMIs.
Economic Calendar
31 JULY AU New home Sales
AU Building Approvals
US Consumer Confidence
EU Euro-zone Unemployment rate

To contact the editor, e-mail: