Australian Dollar Outlook - 30 November 2012

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By Christine Gaylican | November 30, 2012 12:19 PM EST

Bell FX Currency Outlook: The AUD traded at a high of 1.048 yesterday afternoon after House Speaker John Boehner offered a downbeat assessment of progress in budget talks in Washington. AUD currently trading at around 1.043.

CMC Markets foreign exchange dealer Tim Waterer said commentary from US president Barack Obama and House leader John Boehner had given markets a boost.

"We had some positive commentary from the deal-makers in Washington, and that was warmly received by financial markets," he said. "That turnaround in risk sentiment suited the Australian dollar, and saw it edge back over the 104.50 (US cent) level. Mr. Obama had hinted that a deal on the fiscal cliff - a series of tax rises and spending cuts due to start in 2013 - could be brokered by Christmas," Mr Waterer said.

Domestic capital expenditure data released this morning did little to move the Australian dollar and there was quite a muted response to that, he said.

Traders are focusing on the bigger global picture. He noted that the data showed that new private capital expenditure rose 2.8 per cent in real terms, seasonally adjusted, in the September quarter. This compared with an expectation that capital expenditure would rise 2.0 per cent for the quarter.

Meantime, Australian bond futures prices were higher at noon. At 12pm AEDT today, the December 10-year bond futures contract was at 96.885 (implying a yield of 3.115 per cent), up from 96.865 (3.135 per cent) at yesterday's close.

The December three-year bond futures contract was trading at 97.350 (2.650 per cent), up from 97.330 (2.670 per cent).In local news the market has ramped up the probability of a Dec RBA cut next week from 60% to 73% after yesterday's Capex expectations downgrade.

In this morning's AFR, Alan Mitchell has said that given these downside risks to growth he'd be surprised if the RBA does not ease monetary policy
further.

Majors: Gold futures won back some of their recent losses, as talk over whether Washington will be able to avert large-scale U.S. spending cuts
and tax hikes put overall pressure on the dollar and boosted demand for riskier assets. Crude-oil futures bounced higher on the heels of a three session losing streak, as optimism over a potential U.S. resolution to the so-called fiscal cliff improved investors' appetite for risk.
Economic Calendar
29 NOV AU OCT PRIVATE CREDIT SECTOR
EC OCT UNEMPLOYMENT RATE
GE RETAIL SALES
US OCT PERSONAL INCOME/SPENDING
US NOV CHICAGO PURCHASING MANAGER
If you require latest pricing and ranges, visit www.bellpotter.com.au

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