Australian Dollar Outlook – December 19, 2014

IN PHOTO: A stack of Australian one dollar coins stand on a U.S. one dollar note in this photo illustration taken in Sydney July 27, 2011. Australian consumer prices rose by more than expected last quarter while underlying inflation proved alarmingly high, reviving pressure for an increase in interest rates and lifting the local dollar to a 29-year peak. REUTERS/Tim Wimborne

Bell FX Currency Outlook: The Australian Dollar has made back some of yesterday's post FOMC losses, currently trading around 0.8160.

Australia: As stated above the AUD has bounced overnight, having dropped more than a cent yesterday morning. The AUD touched a new low of 0.8115 after the FOMC meeting where the Fed effectively said it could begin raising rates as early as April next year. News out of Europe was the main driver of markets overnight (see below) and the AUD managed a rally back to 0.8200 against the USD as risk appetite increased. However some of these gains have since been given back and we are currently trading around the 0.8160 level. It looks like a quiet day ahead for the AUD with no data releases out of Australia, while in Asia the main item of note is the BoJ monetary policy statement

Majors: Switzerland's franc (CHF) weakened the most in 18 months versus the EUR after the nation's central bank introduced negative interest rates to defend the currency's cap. The Swiss currency appreciated to within 0.07% of the cap (EUR1.20) yesterday, reaching the strongest level since September 2012. The EUR fell for a second day against the USD as the Swiss National Bank decision boosted speculation the European Central

Bank will expand stimulus measures next year. The GBP climbed from the lowest level in more than a year versus the USD after a report showed U.K. retail sales increased more in November than economists predicted. The data showed a rise of 1.6% month-on-month (0.3% expected) and 6.4% year-on-year (4.5% expected) with the GBP rising 0.6% on the news, having fallen to $1.5541 yesterday, the lowest since September 2013. In the US initial jobless claims fell more than expected last week, pointing to further improvement in the US labour market. The Bloomberg weekly consumer comfort index also hit a seven-year high. Both point to a strong US domestic backdrop. Slightly more disappointing was the dip in the US Markit Services PMI to 53.6 and fall in the Philly Fed index in December, but the latter move was broadly anticipated after the index spiked in November. There are no notable data releases out tonight

Economic Calendar

19 DEC NZ ANZ Business Confidence Dec

GE GfK Consumer Confidence Jan

JN Bank of Japan Monetary Policy Statement

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