Australian Dollar Outlook - 18 January 2013

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Bell FX Currency Outlook: The resilient Australian Dollar has opened the day's trade in the mid-1.0500's once again after poorer jobs data yesterday in Australia pushed the AUD below 1.0500 overnight. A higher Chinese GDP set to be out today is deemed to push the AUD higher.

Australia: The AUD took a tumble after December jobs data locally saw a fall in employment of 5.5k jobs and the unemployment rate rose slightly to 5.4%.

With weaker job ads and a number of announcements of redundancies in Australia over the last week, the bearishness tone in the AUD looked like it would continue into the European and US time zones but better than expected economic figures especially relating to housing starts in the US as well as a decline in initial weekly jobless claims turned around the sentiment toward the AUD.

Equities were stronger across the board in both Europe and the US with the S&P500 hitting its highest level since December, 2007 and now being only 5.6% away from its highest level ever.

This was even more surprising after two major banks in the US, Citibank and Bank of America, reported poorer results than expected.

A report on the RBA's FX transactions for last month reveal an increase from $414m in November to $752m in December implying the RBA has been buying foreign exchange reserves and selling the AUD to keep a lid on the strength of the AUD.

The news flow continues to come today with Chinese GDP data for Q4 to be released along industrial production, fixed assets investment and retail sales data for December.

Most analysts are predicting an 7.8% yoy result. If the figure is above this level we could see the AUD rise toward the 1.0600 level.

Majors: Another successful bond auction for EUR4.5bn by the Spanish government set the tone for the day offshore and helped push the EURUSD rate close to 1.3400.

The USD weakened in general after commodity process moved higher and equity markets continued their strong run of late.

Housing starts for December in the US were the best since June, 2008 at a rate of 954k on an annual basis.

Weekly initial jobless claims fell by 37k from last week to 335k and now are at their lowest level in five years. We will see if the better numbers from the US of late are reflected in the University of Michigan consumer confidence survey when it is released tonight.

Economic Calendar18 JAN NZ Consumer PricesCH Real GDPCH Retail SalesJN Industrial Production

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