Australian Dollar Outlook - Feb. 4, 2016
Bell FX Currency Outlook: The Australian Dollar up 2.0% overnight approaching the 0.7200 level. USD fell across the board whereas oil prices made gains.
Australia: Yesterday’s building approvals, international trade and services sector data for December 2015 highlighted a few risks to the domestic economy. The first is a slowing in the labour intensive residential
construction industry. Looking through the monthly volatility, building approvals are trending lower and were 8% below their April 2015 peak. Growth in dwelling prices has slowed sharply, removing one tailwind for consumer spending. The strength in property and related activity has been a key support to overall activity and jobs growth. The NAB Quarterly Business Survey is released at 11:30am AEDT. We’ll be watching firms’ year-ahead capex expectations and views on the availability of labour.
Majors: The USD was notably on the back foot as the weaker US services sector report saw markets stop out long USD positions. USD/JPY dropped below levels prevalent before the BoJ and EUR/USD broke above 1.10. AUD and NZD strengthened with commodities supportive. US data were mixed, the US non-manufacturing ISM (PMI) came in almost two points below consensus at 53.5. This included a fall in the
employment sub-index to 52.1 from 56.3. It was last lower in April 2014. The earlier ADP employment reading came in 205k, just above the current 190k consensus for Friday’s non-farm payrolls. Forecast for the latter might now being revised down after the ISM. The bounce in crude oil prices was extreme, with prices up 10% from the low. Prices rose with a decline in the US dollar and despite steep gains in US crude inventories.
Economic Calendar 04 FEB
- AU NAB Business Confidence Q4
- EU ECB Economic Bulletin
- UK BOE Interest Rate Decision Feb
- US Factory Orders Dec
Bell Fx
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