Australian Dollar Outlook - 17 December 2012

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By Christine Gaylican | December 17, 2012 11:04 AM EST

Bell FX Currency Outlook The Australian Dollar has opened this morning in the mid 1.0500's as trading on Friday evening saw little change from the previous day.

Australia: There were reports that after a meeting between President Obama and House of Representatives Speaker John Boehner that the Republicans were willing to consider tax increases for those individuals earning over US$1m per year in exchange for some reduction in federal entitlements.

President Obama continues to insist that tax increases should apply to joint incomes in excess of US$250k before he will consider any reduction in entitlements. Equity markets continued to drift with the major indices in the US registering small losses with the Dow down by 0.3% and S&P 500 off by 0.4%.

This was followed by a very lacklustre day in Europe where only small gains and losses occurred in equity markets. We are in for a very light week of data in Australia with the RBA board minutes from their meeting earlier this month to be released tomorrow followed on Thursday by the RBA's quarterly Bulletin.

On Wednesday we will see that DEWR Skilled Vacancies index which should provide us a clue to the strength of the labour market in Australia.

Later today RBA Assistant governor DeBelle will be speaking at a conference in Sydney.

Majors: US industrial and manufacturing production for November was better than expected growing by 1.1% as compared to estimates of 0.3% and 0.5%, respectively, as the effects of Hurricane Sandy no longer impacted the figures.

This was after German PMI services data for December printed slightly better than forecast while their manufacturing
data was slightly lower than expected.

The EUR continues to gain strength versus the USD trading close to just under 1.3200 which has weakened the AUDEUR cross rate.

In Japan, it appears from exit polls that the LDP (Liberal Democratic Party) has won a large majority in the recent election returning Shinzo Abe to power and setting the scene for more aggressive stimulus from the Bank of Japan to try and get the slow growing Japanese economy moving.

More public spending is anticipated. The JPY continues to weaken in light of the prospect of greater monetary
and fiscal stimulus which is a scenario seemingly favoured by just about every other central bank.
Economic Calendar
17 DEC NZ WBC Consumer Sentiment
AU Assist Gov Debelle Speaks
EU Italian Trade Balance
EU Trade Balance
EU ECB president Draghi Speaks

If you require latest pricing and ranges, visit www.bellpotter.com.au

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