Australian Dollar Outlook - 04 January 2013

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Bell FX Currency Outlook: Australian Dollar still strong peaks at a two week high as the United States avoids fiscal cliff.

Australia: It was a day of consolidation on European financial markets after yesterday's strong rally triggered by the US Congress agreement on measures to avoid part of the 'fiscal cliff'.

The AUD outperformed overnight rising to above 1.05 but retraced some of this gain following the FOMC Minutes. The AUD/USD was sold late last night and could be construed as vulnerable if it fails to hold at 1.0460. Should this occur, we could well find ourselves back below 1.0400 where it sat prior to the Senate Bill being passed by the House of Representatives on Wednesday.

There is nothing today as far as local data and events calendar.

Majors: The USD strengthened against most major currencies, finding support after the US budget bill to partly avoid the 'fiscal cliff' and saw further support following the December FOMC Minutes which referenced ongoing asset purchases potentially ending 2013.

The minutes indicate that "a few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013" and "several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet".

Market attention now turns to the payrolls employment report released tonight.

The EUR/USD fell through the session with only a modest and short-lived rally from better-than-expected German and Spanish unemployment data.

Bloomberg Research survey shows a market consensus for non-farm payrolls of +153k (150k for private payrolls). The unemployment rate is seen stable at 7.7%.Economic Calendar3 JAN EU Dec CPI FlashEU Dec PMI services finalUS Dec non-farm payrollsUS Dec unemployment rateUS Nov Factory orders

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