Australian Dollar Outlook - 25 January 2013

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Bell FX Currency Outlook: Australian dollar softens despite positive Chinese data.

Australia: The Australian Dollar has fallen almost half a US cent despite a positive Chinese manufacturing read in yesterday's session.

Currency markets were mixed overnight with the AUD and Japanese Yen notably weaker against a stronger US Dollar buoyed by more hints of an improving US economy.

Chinese flash HSBC manufacturing PMI surprised slightly on the upside yesterday coming in at 51.9 vs. an expected 51.7. A reading above 50 indicates growth whilst anything below represents contraction.

The AUD fell to a low of 1.0450 against the greenback overnight despite the positive growth from China. Without any major data releases today, the AUD will likely trade with a heavy tone. Monday is also a public holiday for Australia.

Majors: Markets were generally positive overnight following better than expected data out of the US and Europe. Stocks were mainly higher, although weaker than expected revenue results from Apple capped gains in US markets.

The S&P 500 pared early gains to finish unchanged at 1,495 while the DJIA added 0.4% to 13,829. The strong downdraft fromApple was offset by surprisingly strong economic signals US factory activity grew by the most in nearly two years in January and jobless claims dropped to a five year low.

Europe also saw an improvement in data with German and European manufacturing PMI's rising by more than expected; undoing some of the disappointment seen with the sharp drop in the French PMI read for January. European equities gained overnight with the German DAX adding 0.5% to 7,748 and the FTSE ending 1.1% higher at 6,265.

Oil prices rose overnight with Brent and WTI futures ending 0.5% higher at USD 113.3 per barrel and USD 96.0 per barrel. Metals and commodities were mixed but mostly higher while spot gold ended 1.0% lower at USD 1,670 per ounce. Tonight will see German IFO survey for January released along with US 4th quarter GDP data.Economic Calendar24 JAN GE Jan IFO Business climateUK Q4 GDPUS Dec New Home salesCH Jan MNI Business Sentiment Indicator

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