A man withdraws money from an ATM machine
A man withdraws money from an ATM machine outside a bank in Cairo, December 31, 2013. Reuters/Stringer

Bell FX Currency Outlook: The Australian Dollar continues to retain its firm tone ahead of this week’s widely anticipated meeting of the US Federal Reserve.

Australia: The AUD opens trade this morning just below the .7100 mark as the eagerly anticipated US Federal Reserve meeting over two days on Wednesday and Thursday approaches. We believe the AUD will trade in a fairly narrow range prior to the meeting. Over the weekend the latest figures from China were slightly weaker than expected with industrial production advancing by 6.1% yoy for August as compared to predictions of +6.5% while retail sales rose 10.8% which slightly exceeded forecastsof +10.6%. Fixed asset investment grew by the smallest amount in 11years rising 10.9% versus the 11.2% expected. Tomorrow we will see the latest RBA minutes from their meeting earlier this month. Later in the week if the US Federal Reserve does not raise interest rates we would expect the AUD to firm unless there are some other surprises in financial markets.

Majors: In the US, the latest PPI figures were largely in line with expectations with no inflation on a month to month basis while the yoy figures fell 0.8%. When food and energy are eliminated the figures rose0.3% mom and 0.9% yoy which is only slightly higher than predicted. The recent volatility in financial markets is thought to have caused a decline in the preliminary September consumer sentiment survey figures from theUniversity of Michigan. The index fell to 85.7 from the recent figures of91.9 and are lower than the 91.1 expected. The US budget deficit in August came in slightly lower at a deficit figure of USD64.4bn versus theUSD77.5bn expected. Germany’s CPI figures for last month were in linewith expectations at 0% mom and rising only by +0.2% on a yoy basis. Inthe UK, construction output for July declined by 1% mom and by a lesser amount of 0.7% on a yoy basis. On Tuesday, we will hear from the Bank of Japan who are not expected to alter their current monetary policy. Onour Friday morning we will hear the results of the US Federal Reserve meeting. At the moment the market is pricing in only a 1 in 4 chance of an interest rate rise although about half of economists surveyed believe theUS Federal Reserve will increase rates.

Economic Calendar

14 SEPT

  • AU Credit Card Purchases/Balances Jul
  • JN Industrial Production Jul

15 SEPT

  • AU RBA September Meeting Minutes

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