Australian Dollar Outlook – January 14, 2015

A woman walks past a stock quotation board outside a brokerage in Tokyo September 2, 2013. Asian shares climbed to a two-week high on Monday, and the Australian dollar and copper gained, as China said its manufacturing expanded in August at the fastest pace in more than a year. REUTERS/Toru Hanai

Bell FX Currency Outlook: The Australian Dollar has remained within the recent 0.8100-0.8200 range yesterday.

Australia: The AUD tested lows around 0.8125 a couple of times yesterday, while also touching highs just under the 82 cent level. Yesterday afternoon saw the currency at its strongest following trade data out of China which showed a record importing of iron ore and oil, as lower prices prompted stockpiling. China oil imports rose by 19.6% m/m in December and 13.5% on an annual basis. Brent oil prices plunged 23% in

December, supporting strategic and commercial buying, while iron ore imports jumped almost 30% m/m to 86.9 million tonnes in December - the highest on record. These gains were given back over the course of the afternoon and into the European session, with the low then being retested as the USD rallied. As of this morning the AUD is back in the middle of the range around 0.8160. There are no major data releases out of Australia today.

Majors: Last night the EUR fell to a nine-year low as officials fuelled speculation that the European Central Bank will begin buying government bonds as early as next week to stave off deflation. The selloff came after

ECB Governing Council member Ewald Nowotny said during a panel discussion late yesterday in Vienna that policy makers must treat the threat of deflation seriously and shouldn't delay a response. Other news out yesterday was that the World Bank cut its forecast for global growth this year, as an improving U.S. economy and low fuel prices fail to offset disappointing results from Europe to China. In the semi-annual Global Economic Prospects report, the Bank expects the world economy to expand 3 percent in 2015, down from a projection of 3.4 percent in June. The USD had another good night with the NFIB small business survey increased to 100.4 (98.5 expected) in December, the highest level since 2006. In the UK the headline CPI data for December was weaker than expected, easing to an annual pace of 0.5% (0.7% expected), which is the lowest rate since May 2000. This fall was driven by declines in oil prices and led to expectations of a UK rate hike being pushed out to 2016. The major news out tonight is Advocate General Pedro Cruz Villalon of the EU

Court of Justice delivering his opinion on the legality of the OMT program tonight, with the expectation being that there will be no legal problems with implementing ECB's QE program.

Economic Calendar

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