Australian dollar notes and coins can be seen in a cash register at a store in Sydney, Australia, February 11, 2016.
Australian dollar notes and coins can be seen in a cash register at a store in Sydney, Australia, February 11, 2016. Reuters/David Gray

Bell FX Currency Outlook: The Australian Dollar rallied through USD0.7800 overnight, buoyed by higher oil prices.

Australia: After treading water for much of yesterday’s session, the AUD finally broke through USD0.7800 for the first time on 10 months on the back of broad USD weakness and higher oil prices which boosted risk assets. RBA governor Glen Stevens gave a speech in New York which had more of an international focus then a domestic focus. In his speech, Stevens argued that central banks can only do so much and that monetary policy had reached its effective limit. He omitted any mention of the currency which may suggest that the AUD is not near a level that worries the central bank. Coming up this morning we get the leading index reading for March along with skilled vacancies also for March. Of interest today in Japan we get Japan’s trade data for March. The market is expecting the trade balance to have risen to JPY450bn in March from JPY166bn previously. Another soft print of trade data should add to the case of further easing by the Bank of Japan when it holds its policy meeting next week.

Majors: The USD weakened Tuesday night, weighed down by soft US economic data and a surge in oil prices. Home building starts in the US slowed in March to the lowest level since October, providing further evidence that domestic conditions aren’t idea to warrant an increase in interest rates from the Federal Reserve. This weakened the dollar as low rates are less attractive to yield seeking investors. Crude oil continued its recovery post the failed Doha talks as the attention returned to fundamentals. US Stocks edged higher, the Dow climbed 49 points or 0.3% to 18,054, the second day it closed above 18,000 since July 2015. Ahead tonight in the US we have mortgage applications for April and existing home sales for March.

Economic Calendar 20 APR

  • JN Trade Balance (Adjusted)
  • AU Skilled Vacancies MoM
  • CA Wholesale Trade Sales MoM
  • US Existing Home Sales MoM

Bell Fx

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