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 higher, getting support from stronger overseas stock markets and higher commodity prices.

Australia: At writing, the AUD is trading at USD 0.7195. The USD was broadly under pressure overnight as US core inflation failed to tick higher, with the AUD also continuing to benefit from a stabilised domestic storyand yesterday’s bounce in Shanghai equities. It was a whippy session incurrency markets, but a more subdued day in other areas, with markets largely in a holding pattern ahead of tonight’s pivotal FOMC decision. Analysts are evenly split on whether the long-awaited rates normalisation will commence tomorrow but the market is pricing around 30% odds. Market odds tumbled on the financial market volatility that kicked off withChina’s devaluation, volatility that has subsequently subsided but not completely gone away. The FOMC decision is at 4am AEST. There is no key domestic data. The RBA Bulletin is released at 11:30am AEST andNZ Q2 GDP data are out at 8:45am AEST.

Majors: US stocks were up for the second consecutive session. The headline CPI declined 0.1% m/m and just 0.2% y/y, both as expected. The US NAHB housing market index was upbeat, rising to 62 (mkt: 61) whichis a 10-year high. These data continue to point to a further upswing in residential construction activity moving forward. UK August labour market data were stronger than expected. In the three months to July the unemployment rate edged lower to 5.5% (mkt: 5.6%) and employment rose 42k. At the Treasury Select Committee hearing, BoE Governor Carney reiterated the timing of when to raise interest rates will come into sharper relief at the end of the year if the economy continues to evolve as expected. The OECD marginally lowered its global GDP growth projections, paring its 2015 forecast to 3.0% from 3.1% and its 2016 prediction to 3.6% from 3.8%. The growth outlook for major emerging market economies was cut, but 2015 growth forecasts for the US were upgraded. Agri markets were generally weaker. the Fed tomorrow morning is the main event, with USD volatility assured.

Economic Calendar 17 SEPT

  • JN Trade Balance adjusted
  • UK Retail Sales Ex Auto Fuel MoM
  • US Philadelphia Fed Business Outlook
  • US FOMC Rate Decision

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