dollars
A U.S. dollar note (bottom) is pictured alongside other currencies including (L-R) the Australian Dollar, Singapore Dollar, Korean Won and China's Yuan in this picture illustration taken in Washington, October 14, 2010. Reuters/Jason Reed

Bell FX Currency Outlook: The Australian dollar opened on the softer side this morning as markets digest the weekend’s
tragic events.

Australia: News of the Paris terrorist attacks only came about half an hour before spot FX markets closed on Friday night, with the response reasonably muted. The AUD opened up a slightly softer, around 0.7110, having recovered a little since then. The weekend’s events are likely to weigh on risk sentiment at the start of this week. Early on Friday night the AUD underperformed against the USD despite weaker US retail sales data (see below). Today’s only data release is new motor vehicle sales, but the focus for the week is likely to be around the RBA. Tomorrow we have the release of the November meeting minutes (although these have been largely superseded by the November quarter Statement on Monetary Policy), which RBA Assistant Governors Christopher Kent (Economic) and Guy Debelle (Financial Markets) speaking tomorrow and Wednesday
respectively, with Q&A at both events.

Majors: The EUR opened on the softer side this morning, below 1.0750, with the JPY and USD stronger on flows towards safe haven. Rises in US dollar indices (DXY +0.16% to 98.80, BBDXY +0.3% and ADXY -0.3%) were driven by a 0.4% drop in EUR/USD to 1.0773 and pressure on EM currencies. On Friday night’s data, US October retail sales were softer than expected (0.2% vs. 0.4% expected) and the University of Michigan consumer confidence rose more than expected to 93.1 in November from 90 in October (exp: 91.5). The Fed’s Mester was broadly supportive of a December ‘lift-off,’ and like other Fed speakers earlier in the week, appears reasonably confident of more progress on the inflation half of the Fed’s dual mandate in 2016 as the sharp fall in energy prices fades and the USD stabilises. Euro area Q3 GDP printed a tenth weaker than market expectations at 0.3% q/q and 1.6% y/y. The slightly disappointing result only adds to the case for additional monetary policy accommodation from the ECB at its December meeting. Tonight the Eurozone CPI and a speech from the ECB President Draghi will be the focus.

Economic Calendar 16 NOV

  • 16 NOV EC ECB President Draghi speaks in Madrid
  • US Empire Manufacturing
  • JN GDP SA QoQ

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