Australian Dollar Outlook - 23 January 2013

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By Christine Gaylican | January 23, 2013 10:21 AM EST

Bell FX Currency Outlook: The Australian Dollar has moved higher after the Bank of Japan announced further stimulus measures designed to further weaken the JPY in the future.

Australia: The currency market expected to see the Japanese announce further fiscal stimulus measures yesterday and they were not disappointed with further asset purchases of 13trn JPY (USD13bn) each month to begin in January, 2014.

The delay to the start of the program saw the JPY initially strengthen against the USD. The central bank also announced their new inflation target was 2% (currently 1%).

The AUD jumped quickly after this event and has maintained its strength overnight as US equity markets continued to move higher as 2012 results continue to exceed most analysts' estimates.

After the close of the market further positive impetus was provided when Google and IBM reported higher results than predicted.

Today at 11:30 am ADT we will see the announcement of the Q4 CPI result (a figure of 0.4% and 2.4%yoy is widely forecast) followed by the announcement of China's leading economic indicators early this afternoon.

Majors: In Europe the tone was in general positive after the German ZEW economic survey for January was up strongly rising to 31.5 which is up from 6.9 the previous month.

This was in contrast to a generally modestly down day on equity markets in Europe as 11 Euro countries (Germany and France are included) discussed a new tax on financial transactions designed to raise potentially EUR50bn in revenue. Being discussed was a tax of 0.1% on share and bond transactions and 0.01% on derivatives.

The GBP was weaker after the Bank of England Governor said the central bank was ready to provide further stimulus to help bolster the UK

In the US existing home sales for December were lower than expected (they fell by 1%) but the recent firmer tone in housing market in
the US remains. The manufacturing index for Federal Reserve district centred around Richmond, Virginia fell sharply this month from the December result.

Economic Calendar
AU Q4 avg RBA core inflation
EU Jan consumer confidence
UK Bank of England meeting minutes

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