Australian Dollar Outlook - 10 December 2012

By @ibtimesau on

Bell FX Currency Outlook: The Australian Dollar has maintained its relative strength from last week as US non-farm payrolls released on Friday night improved more than forecast.

Australia The AUD has maintained its firm tone and has opened trade in the high 1.0400's today as US payroll data for last month rose by 146k versus the increase expected of 85k jobs.

Revisions were made to the previous two months figures whereby there were actually 49k less jobs created than previously announced. The unemployment rate fell slightly by 0.2% to 7.7% although the participation rate also fell.

This better news helped equity markets move modestly higher with the Dow index up by 0.6%, the S&P500 up by 0.3% although the NASDAQ was off by 0.4%, largely due to a fall of 2.5% in the Apple, Inc. share price to US$533 a share.

In Europe, indices saw small rises or losses. Helping the AUD start the week on a firm tone was encouraging November activity data from China released over the weekend that saw industrial production rising 10.1% year on year and retail sales growing by 14.9% which was up from the 14.5% figure in October although still below the 16% growth the market was expecting.

Most analysts continue to predict the Chinese growth in GDP for Q4 will be at the 8% level. CPI data for the month saw a rise of 2% yoy indicating that inflation is not a major concern.

Later today we will see import and export data from China for last month released where it is expected exports will advance 9% y-o-y and imports will rise 2% y-o-y.

Locally, late this morning we will see home loan data for October announced. The Chinese data, if favourable, could push the AUD through the 1.0500 level later today.

Majors: The US non-farm payrolls release pushed the stalemate on the fiscal cliff issue into the back ground on Friday although Europe did its best to grab the headlines with news that the Italian Prime Minister Mario Monti intended to resign once his budget was passed by Parliament.

Former PM Silvio Berlusconi announced he was going to run again and said he will support the budget although his previous stance has been to rollback many of the austerity measures already announced.

This added a negative tone to the EUR which was not helped by the German Bundesbank lowering projected German growth in 2013 from 1.6% to 0.4%.

Further talk about the ECB possibly lowering the cash rate from 0.75% in Q1 2013 also was a factor in pushing the EURUSD rate below 1.2900.

On Wednesday night this week, the US Federal Open Market committee meets and analysts expect that further direct purchases of US Treasury securities that could be as high as USD80bn per month will be announced since the previous program of Operation Twist is due to end this month.Economic Calendar10 DEC NZ Manufacturing SalesJP Manufacturing indexJP Final GDPCY Trade BalanceAU Home Loans m/m

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