Bell FX Currency Outlook: The Australian Dollar
continues in languish in the 0.9800's after the G8
meeting held on the weekend produced no "revelations"
of how to deal with the economic woes of Europe.
Australia: The G8 meeting at Camp David in America that brought
together the leaders of the USA, UK, Germany, France, Italy, Japan,
Russia and Canada along with two representatives of the European Union
produced nothing really new in terms of initiatives to soothe the concerns
of financial markets about the state of Europe. The meeting's official
announcement of "We agree on the importance of a strong and cohesive
euro zone for global stability and recovery, and we affirm our interest in
Greece remaining in the euro zone while respecting its commitments" will
do little to calm markets concerned about the potential contagion effects of
Greece leaving the EUR. Major European and US equity indices were all
modestly lower on Friday night with the eagerly awaited IPO of Facebook
on NASDAQ underwhelming the market with the underwriters buying
shares to ensure it finished the day just above its issue price of USD38 per
share. Gold continued its firmer tone rising for a second day in a row to
just under USD1,593 an ounce. There is very little data in Australia this
week with the HSBC flash PMI data for May due to be released on
Thursday. It must have been the weekend for politically correct
announcements with Chinese Premier Jiabao saying "We continue to
implement a proactive fiscal policy and a prudent monetary policy, while
giving more priority to maintaining growth". The market expects we may
see another reduction in the ratio reserve requirement for Chinese banks
in the next month or two but this is unlikely to alter the bearish tone in
financial markets in the short run. We see AUD remaining under pressure.
Majors: After the rash of economic data in the last few weeks, this week
sees only minor data releases offshore as well with existing and new
home sales figures in the US due on Tuesday and Wednesday followed by
durable goods orders on Thursday and consumer sentiment on Friday.
With two major US retailers, JC Penney and Abercrombie & Fitch,
reporting disappointing earnings results on Friday that saw their shares fall
20%, investors will be looking for further clues that the US recovery,
although modest, is still continuing. New Zealand is releasing their budget
on Thursday where PM John Key will announce a conservative budget
with plans to bring in a surplus in the 2014/2015 financial year. All eyes
continue to be focused on the financial and economic dramas in Europe
and Greece.
Economic Calendar
21 MAY CA Public Holiday
EU ECB Announces Bond Purchases
Fed's Lockhart (VM) Speaks on Monetary Policy
JN All Industry Activity Index APR