Bell FX Currency Outlook: The Australian Dollar is steady this morning after a night of mixed fortunes in financial markets.
Australia: Equities were flat, yields lower, oil lower and gold higher. The USD underperformed, with JPY the outperformer, while CAD and our AUD underperformed slightly.
Ranges were tight though, amid little news ahead of the heavy data calendar next week. In the US evidence, of a slow-down
continued to mount as consumer confidence and house price trends eased, however the USD was only marginally weaker.
The AUD was the main underperformer on the day, giving back some of the prior days' gains. These trends will remain in focus through today's session, while in Australia construction work done will provide the first building block of Q4 GDP.
The AUD should be relatively quiet today, maybe a tad on the soft side.
Majors: Overnight, in Europe, the final read for Q4 GDP growth was unchanged in Germany, the breakdown of the data revealed that growth in the quarter was largely driven by exports. Meanwhile, the European Commission modestly revised higher its forecasts for euro zone growth to 1.2% in 2014 and 1.8% in 2015.
As stated above, in recent days, news from China has become a focus for markets once again. Volatility has spiked due to the Yuan, both onshore (CNY) and offshore (CNH). This has been driven by a decision from the PBOC (the Chinese Central Bank) to set the fixing rate for the CNY at a weaker level in the past week.
While there has been extensive speculation about the reason for this, the markets believes the PBOC is reintroducing two way volatility into the currency market after its recent rally.
This shift is possibly motivated by a desire to realign the onshore and offshore markets ahead of a widening of the trading band for the Yuan. This would be a positive development signalling continued momentum in reform and deregulation of the financial sector rather than a signal that they are targeting a weaker Yuan.
Finally, in the US, consumer confidence came off its highs and was below expectations, but it remains at relatively good levels. Fed Chair Janet Yellen gives her delayed testimony to the Senate tonight.
26 FEB AU Construction Work Done Q4
AU NAB Commercial Property Survey Q4
US New Home Sales Jan
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