Australian Dollar Outlook - 08/10/2012

Bell FX Currency Outlook: A quiet night of trade and
subdued risk appetite capped gains for the Australian
Dollar overnight.
Australia: The AUD rallied in yesterday's domestic session as local
employment figures beat market expectations with 14,000 jobs added in
July. The unemployment rate fell to 5.2% from 5.3% in June. Chinese
inflation figures also released on Thursday showed a low 1.8% for July
which could give China's Central Bank (PBOC) enough room for another
round of stimulus and a further reduction in the RRR (reserve requirement
ratio). This would be seen as supportive of risk and therefore quite likely a
boost for the AUD. As we near the end of this week, there are two key
themes in financial markets at present. Firstly, as just written, China's
data continues to show a bottoming in the slowdown. Secondly, the three
big central banks (ECB, US Fed and the PBOC) all look ready to ease
policy. Today sees trade data for July out of China with expectations for
data to remain weak. Domestically the RBA's Statement on Monetary
Policy will be released at 11:30am. Markets will look to the statement for
growth forecasts and concerns over for the global economy. Traders will
also look to the statement for hints on and further policy easing. We
expect the Australian dollar to remain range bound till the data release.
Majors: European and US markets ended the quiet session broadly
unchanged shrugging off the relatively weak Chinese data. The S&P 500
ended steady at 1,403 whilst the Dow jones closed 0.1% lower at 13,165.
Better than expected US employment data saw US treasuries sold off as
initial claims declined to 361k this week. Trade Deficit for the US also
narrowed more than forecast in June as the biggest drop in crude oil
prices in more than three years helped cut the nations import bill. Over in
Europe the German DAX ended unchanged at 6,965 whilst the FTSE
ended 0.1% higher at 5,852.00. Oil prices were broadly unchanged with
both WTI and Brent futures closing 0.1% higher at USD 93.5 per barrel
and USD 113.3 per barrel. Hopes for further policy easing from the PBOC
saw Gold prices edge higher ending the session 0.3% higher at USD 1617
per ounce.
Economic Calendar
10 AUGUST AU RBA Statement on Monetary Policy
CH Imports / Exports JUL
UK PPI Input / Output JUL
US Monthly Budget Statement JUL

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