Australian Dollar Outlook - June 1, 2015

IN PHOTO: Uncut sheets of former U.S. President Abraham Lincoln on the five-dollar bill currency are seen at the Bureau of Engraving and Printing in Washington March 26, 2015. The 150th anniversary of Lincoln's assassination at Ford's Theatre in Washington is April 15. REUTERS/Gary Cameron

Bell FX Currency Outlook: The Australian Dollar begins trading this week in the low .7600’s as US Q1 GDP was revised lower on Friday night and we head into a week filled with many announcements on how the Australian economy is performing.

Australia: The AUD begins the week around where it finished on Friday as figures revealed on Friday night that the US GDP for Q1 fell 0.7% which was not as much as the -0.9% fall expected. Today begins the release of a lot of data for the week with April building approvals, inflation, house price data, company profits and inventories, the AIG manufacturing PMI index along with the latest official PMI data from China late this morning along with HSBC’s own PMI data. These figures will give us a good indication of what the GDP is likely to be for Q1 when it is released on Wednesday. The market in general expects a result of +0.6% qoq and +2% yoy which will be down from the 2.6% yoy figure from December. Tomorrow we will hear the RBA’s decision on the cash rate which the market expects to not change from the current level of 2.0%. On Thursday, the latest local retail sales and trade figures will be released. Unless some of the data surprises to the upside we would expect the recent trend of a weaker AUD to continue.

Majors: In the US many of the components of the GDP figure were weaker than expected with net exports falling 1.9% versus the -1.2% initial estimate, inventories rose only 0.3% as compared to the 0.7% initial rise and business investment fell 2.8% which was better than the fall of 3.4% initially reported. Some analysts have questioned the data due to some seasonal issues. The final University of Michigan consumer sentiment survey was released and we saw a slight rise from the 88.6 figure reported most recently to 90.7 which was higher than expected. The latest PMI data from the Chicago area was weaker at 46.2 versus the 53.0 figure expected and lower than last month’s 52.3 number. In Europe the M3 money supply figures grew by 5.3% in April which was up from the 4.6% yoy figures for March indicating that bank loans to household and nonfinancial corporations continue to rise which is consistent with an easing of credit standards which the ECB has been urging banks to do recently to assist with encouraging growth in Europe. Debt negotiations with Greece continue with no new news generated over the weekend.

Economic Calendar 01 JUN