A miner holds a lump of iron ore at a mine located in the Pilbara region of Western Australia December 2, 2013.
A miner holds a lump of iron ore at a mine located in the Pilbara region of Western Australia December 2, 2013. The world's second-biggest iron ore miner, Rio Tinto, last week said it would delay the expansion of its iron ore operations in Australia to 2017 but save $3 billion in the process. It plans to cut capital spending to $11 billion in 2014 from just under $14 billion this year, and sees capital spending at $8 billion in 2015, which would be less than half the level it was in 2012. Picture taken December 2, 2013. Reuters/David Gray

Bell FX Currency Outlook: The RBA Board meeting is the main event today. We also have Balance of Payments,
Building Approvals, and PMI data released in Australia, as well as the PMI data releases for November in China.

Australia: AUD sits back around the 0.7200 level this morning. The focus will be on the RBA at 2:30 AEDT & China PMI’s released between 12-12:45 AEDT. Markets have interpreted domestic data relatively well lately; therefore it will be up to the RBA statement to give impetus to any downside move. Given the shift of bias that we saw last month, there is not likely to be anything in the above data that pushes the RBA to vastly change their assessment of the economy. The only risk on this front is that they note the declining trend in the unemployment rate. More interesting this month will be the tone around the currency – The statement “the Australian dollar is adjusting to the significant decline in commodities” is looking more difficult to maintain given the lack of response to the recent 20% in iron ore. This is the first of the two major central bank decisions that the market has been eagerly awaiting. The ECB decision on Thursday with a 0.1% cut in the depo rate expected will be pivotal.

Majors: The IMF Board announced that the Chinese RMB will be in its Special Drawing Rights (SDR) currency basket from 1 October 2016, recognising that the RMB is “freely usable” for international payments and China’s importance in global exports. The weight for the RMB was set at 10.9%, compared with 42.97% for the USD and 30.93% for the EUR. The JPY will be 8.33% and GBP 8.09%. No immediate practical implications; for 2016, there may well be an expectation of RMB weakness next year
with EM weakness and AUD also then vulnerable.

Economic Calendar 01 DEC

  • AU Building Approvals Oct
  • CH Manufacturing and Non-manufacturing PMI Nov
  • AU RBA Interest Rate Decision Dec
  • US ISM Manufacturing PMI Nov


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