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 traded over .7000 on Friday night as equity markets were stronger across the board for the second consecutive day and oil rebounded.

Australia: The AUD benefited from stronger equity markets and risk sentiment improved as oil staged its biggest two day rally since 2009 and finished Friday night’s trading at over USD32 a barrel. Although sentiment toward the AUD is still negative the AUD may rise further in the short run if this rally persists. The possibility of further quantitative easing from the central banks of China and Europe also helped overall risk sentiment. Today we hear of the latest business conditions from NAB. A positive result may see the AUD rise into the low .7000’s although we expect any rise to be modest.

Majors: On Friday night we saw the latest home sale figures from the US where existing house sales rose 14.7% in December which was a big turnaround from the fall of 10.5% the previous month. Direct comparisons are difficult since the measurement basis or mortgage originations has changed. The preliminary PMI manufacturing data for January came in at 52.7 which was higher than expected (51.0). The PMI figures for Europe came in at 53.5 which was slightly weaker than last month’s figures (54.3) and weaker than what was expected (54.1). Both manufacturing and the services sectors were weaker. Germany’s PMI data was slightly weaker at 54.5 than last month’s figures of 55.5 and expectations of 55.1. In light of the financial volatility since the start of the year the PMI data from the US and Europe has weathered the turmoil better than many had expected. In the UK, retail sales excluding automobile fuel for December fell 0.9%
mom but rose 2.1% yoy. Later this week there are central bank meeting in the US, New Zealand and Japan. The two day US Federal Reserve meeting which starts Tuesday is expected to not change interest rates
although their comments will be closely scrutinised after the volatility in all financial markets since the start of 2016.

Economic Calendar 25 JAN

  • AU NAB Business Confidence / Conditions
  • JN Trade Balance Adjusted
  • GE IFO Business Climate

Bell Fx

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