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 is lower this morning, back trading with the 77 handle.

Australia: The AUD is currently trading around 0.7750 against the USD, down around a cent from overnight highs. The drop in oil prices (WTI down 1.6%) contributed to the weakness in the AUD and across the commodity currencies, with the NZD, CAD, NOK and RUB all lower this morning. There was also some broader USD strength later in the session, possibly due to the post-ECB weakness in the EUR. The selloff in the AUD comes despite more gains in iron ore. The spot price for benchmark 62% fines surged 8.78%, or $5.69, to $70.46 a tonne, extending this year’s gain to 61.7%. In percentage terms, the gain was the third largest since spot pricing first began in May 2009. It looks to be a quieter day ahead with no major data releases out during the Asian session. It will again be up to global influences to drive the AUD. Preliminary PMI data across Europe and the US will be the main focus for tonight.

Majors: Last night saw the ECB leave rates on hold as expected, with Draghi reiterating that the Governing Council “if warranted to achieve its objective, will act by using all the instruments available within its mandate” and that interest rates will be at “present or lower levels for an extended period of time”. He also responded to criticism (particularly from Germany) that negative interest rates are ineffective, stating that the impact of the March measures have yet to take effect (financial conditions had eased since March) also stating “we have a mandate to pursue price stability for the whole of the Eurozone, not just Germany.” The price action that followed the meeting was interesting, with some initial strength in the EUR followed by a sharp selloff (helping push the USD higher), leaving the EUR back at the same levels as this time yesterday. The GBP followed a similar pattern, not helped by retail sales data showing a fall of 1.3% for the month. US data was mixed; the Philadelphia reversed most of the improvement in March, falling from 12.4 to -1.6 in April, but it was another record low initial jobless claims figure, falling to 247k vs 253k a week earlier.

Economic Calendar 22 APR

  • JN Nikkei Japan PMI Mfg
  • EC Markit Eurozone Manufacturing/Services PMI
  • CA Retail Sales/ex Autos MoM
  • US Markit US Manufacturing PMI

Bell Fx

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