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 is broadly unchanged after a quiet 24 hours, with all eyes now focused
on US employment data tonight.

Australia: The AUD is currently trading just below 0.7150 following a fairly quiet day, with the range just under 50 points, as the market looks to US payrolls data to set the tone for the coming weeks. Yesterday’s main news item was a speech from RBA Governor Glenn Stevens, which reaffirmed that if rates were to move it would be much more likely to be an easing, but for now he still harbours some concerns about housing, not knowing how successful or otherwise policy measures to cool some heated parts of the sector will be. The AUD was a little softer following the speech but soon made back ground. Central banks were the main focus overnight (see below) with the USD fractionally higher and the GBP well down. Before tonight’s payrolls data we have the RBA’s Statement on Monetary Policy, revealing some likely downward revision to its near-term inflation forecasts, if only from trimming its medium to longer term potential growth forecasts from slower population growth. As well the forecasts, the market will be looking for any hints about further rate cuts, with December now looking less likely than February. Also this afternoon there is a speech from Bank of Japan Governor Kuroda.

Majors: The big move last night was from the GBP, as the Bank of England struck a dovish tone at its “Super Thursday” policy meeting, leaving rates on hold (an 8-1 vote) and wishing to gauge the impact of stronger domestic economic conditions and the softer external environment on inflation trends. The Bank downgraded its near-term inflation forecasts and expects inflation to remain below 1% until H2 2016. The Bank cited ongoing weakness in oil prices, the still elevated level of the GBP and weaker global growth expectations as the key drivers behind its weaker inflation profile. The GBP is down from 1.5400 to 1.5200 against the USD this morning. US initial jobless claims were weaker than expected, rising to 276k (262k expected) from 260k. The four-week average rose modestly to 263k from 259k but remain low and consistent with solid payrolls growth tonight. Fed member Lockhart (hawk) spoke, saying that he expects the case for a rate hike to strengthen in the lead up to the next meeting, while Dudley (dove) wants to see higher levels of wage inflation. A good payrolls report tonight will help strengthen the case for a rate hike at the next FOMC meeting.

Economic Calendar
06 NOV

  • AU RBA Statement on Monetary Policy
  • AU RBA’s Edey speech at Conference Gold Coast
  • US Non-farm payrolls/unemployment
  • UK Trade Balance

BellFx

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