Australian dollar coin
A one Australian dollar coin is seen in this picture illustration taken in Sydney, Australia, July 29, 2015. Reuters/David Gray

Bell FX Currency Outlook: The Australian Dollar is trading at USD 0.7000 this morning, slightly higher than local trading levels.

Australia: Risk sentiment continued to improve last night, supporting ‘risk’currencies. Equity markets rallied overnight. There were a lot of cross currents in markets with month and quarter end, but fundamentally the confirmation of negative September inflation in the euro area was seen as skewing the risks towards additional QE on the part of the ECB. Sentiment was also supported by the Peoples Bank of China’s announcement that itwould cut the first home mortgage deposit requirement to 25% from 30%. Gold fell on reduced safe haven demand. Oil prices were up. China beginsits National Day holiday week today (markets are closed through nextThursday, as is Hong Kong today) but this isn’t preventing the release offirst the official China PMIs covering both manufacturing and services (11:00 AEST), the final Caixin manufacturing series and also the latter’s sole services and composite readings (all 11:45 AEST). To the AUD, for it to consolidate at current levels, further upside will be achallenge.

Majors: Global risk sentiment is swinging between optimism and pessimism on a near-daily basis at present, as nervous market participants try to understand the volatility seen in late August. Possible catalysts to be mindful of are much weaker than expected result in closely watched US data series while on the other side of the ledger, any announcement of fresh stimulus from a major central bank may result in equity market gleefor the short term. The hawks are circling. If central banks lose their power over market sentiment, then we could be in for som every interesting times and challenges.

Economic Calendar 01 OCT

  • CH Manufacturing/Non-manufacturing PMI
  • AU CoreLogic RP Data House Prices Sep
  • US Consumer Spending Aug
  • US ISM Manufacturing PMI Sep

[Kick off your trading day with our newsletter]
More from IBT Markets:
Follow us on Facebook
Follow us on Twitter
Subscribe to get this delivered to your inbox daily