Bell FX Currency Outlook: The Australian Dollar continued its firm tone over the weekend as the recent announcement of QE3 by the US Federal Reserve continues to push equity markets higher and the USD continues its downward path.
The markets feel the nervousness surrounding the Spanish situation could well see the AUD test support levels on the downside today. Support at USD1.0380 has yielded so there may be a push lower.
Australia: Equity markets in the US continued their rally on Friday although the moves were not as great as they were on Thursday after the Fed's announcement.
The Dow and S&P500 both rose 0.4% although the NASDAQ outpaced them all with a 0.9% rise after major European indices moved significantly higher with the Euro Stoxx 50 up by 2%, the FTSE 1.6% and the German DAX 1.4%. Base metal commodity prices were all sharply higher with the very volatile spot iron ore price up by over 5%.
WTI crude was up touching US$100 a barrel before closing at US$99 and gold was only marginally higher at US$1,770 after its strong rise after the latest round of quantitative easing on Thursday night.
These upward movements would have traditionally pushed the AUD higher but with major capex cutbacks announced by many large mining companies in recent weeks and general weakness in the non-mining sector of the economy,
the AUD has started the this week at the same levels seen on Friday afternoon.
This week sees the release tomorrow of the RBA minutes from their September 4th meeting. Analysts will be looking for any hints that the RBA will lower the cash rate in October or November.
On Tuesday this week, RBA Assistant Governor DeBelle speaks at a conference in Adelaide on regulatory reform followed the next day by RBA Assistant Governor Kent speaking at a RBA/Treasury/IMF conference entitled "Structural Change and the Rise of Asia" in Canberra.
Majors: The USD continues to trade lower against the EUR at 1.3100 with most analysts predicting a continued slow and steady decline in the USD. Industrial production in the US for August was slightly disappointing with a fall of 1.2% month on month where the market expected no change.
Better news was seen from the projected index for September in the University of Michigan Consumer Confidence index which saw a reading of 79.2 as compared to 74 which was expected. CPI inflation for August was in line with projections rising 1.7% year on year. On Thursday, New Zealand GDP for Q2 will be announced with a rise of 0.4% for the quarter predicted.
17 SEPT AU New Motor Vehicle Sales
NZ Consumer Confidence
EU Euro-zone Trade Balance
US Empire Manufacturing
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