Australian one dollar coins
A handful of Australian one dollar coins is shown in Sydney, February 18, 2004. Reuters/Tim Wimborne

Bell FX Currency Outlook: The Australian Dollar has pushed higher ahead of the Reserve Bank’s interest rate decision.

Australia: There have been various developments which are worthy of consideration with today’s decision. On Friday, the BoJ’s actions drove an equity rally however, this has stalled overnight with disappointing data releases and fading hopes of output cuts in oil. Additionally, yesterday’s PMI reading from China disappointed. In Australia this morning and ahead of the RBA cash rate announcement this afternoon, the weekly consumer confidence reading is of note. Looking towards the RBA, while no change is expected, the market will focus on the tone of the Governor’s statement for sure. The financial markets are currently pricing 32bps of cuts this year, despite domestic data releases continuing to indicate healthy improvements in the non-mining domestic economy. The Board does have time (on its side) to continue reviewing domestic economic signals as global economic/financial developments evolve. It is doubtful the RBA will choose to materially change its view the currency is adjusting to the significant declines in key commodity prices’. Any acknowledgement of a more uncertain outlook due to international developments should temper any AUD-positive impact.

Majors: Overseas, January’s US ISM manufacturing rose slightly, however the employment index was disappointing. Oil prices gave back some of the gains from last week after concerns that Iran will raise its export targets, despite comments from Saudi Arabia willingness to cooperate. Data drove currencies, seeing the USD weaken against most G10 with GBP the outperformer. In commodities, gold is up, copper has managed to post some gains despite the softness in Chinese’s equity markets and iron ore is up. It is a relatively quiet Tuesday.

Economic Calendar 02 FEB

  • AU RBA Interest Rate Decision Feb
  • GE Unemployment Jan
  • EC Unemployment Jan
  • US ISM New York Index Jan

Bell Fx

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