Australian Dollar Outlook - 07 December 2012

Bell FX Currency Outlook: Australian Dollar finds continued support on better than expected Labour Market Data.

Australia The Australian Dollar strengthened in yesterday's session as string of strong domestic data saw demand for the currency lifted.

Yesterday saw domestic Labour Force figures released better than expected with 13,900 jobs added in November and the unemployment rate falling from 5.4% to 5.2%.

Given recent weakness in Job ads figures and leading indicators, employment growth is expected to start easing in
coming months. The local unit rallied into the European session but came under pressure later in the session as comments from ECB President Mario Draghi weighed on the currency.

The unit failed to hold at 1.0500 against the Greenback and moved back into its recent trading range this morning.

Today will see local Trade balance figures due at 11:30am. The deficit is expected to widen from the previous -1.46B with the high Australian dollar taking its toll on exports.

Majors: As expected the BOE and ECB left policy unchanged with the ECB revising down its growth and inflation forecasts for 2013. The EUR came under pressure dragging the GBP with it as the Central bank significantly downgraded forecasts; in particular cutting its 2013 GDP forecast from +0.5% to -0.3%.

ECB President Draghi commented that he saw "downside risk to the economic outlook and weak activity is expected to extend into next year".

Despite the lower GDP forecast he remains hopeful growth will reappear later in the year. European equities were generally higher with the FTSE closing 0.2% higher at 5,901 and the German DAX closed 1.1% higher at 7,535 off the back of stronger than expected manufacturing data.

US equities saw small gains as news Republicans and Democrats have signed a letter to explore "all options" to avoid the impending fiscal cliff. The S&P 500 ended 0.2% higher at 1,412 while the DJIA rose 0.1% to 13,050.

Following comments from ECB President that the Eurozone economy is likely to shrink in 2013 oil prices ended the session lower with Brent falling 1.8% to USD 106.9 per barrel and WTI futures falling 1.7% to USD 86.3 per barrel.

Commodity and metals were broadly lower on US dollar strength while Gold prices firmed off the back of Draghi's comments.
Economic Calendar
07 DEC AU Oct trade balance, AUDbn
GE Q3 labour costs
US Nov non farm payrolls change
US Nov enemployment rate
If you require latest pricing and ranges, visit www.bellpotter.com.au

To contact the editor, e-mail: