One dollar and 10 cents in Australian currency sit atop a U.S. one dollar note in this photo illustration taken in Sydney July 27, 2011.
One dollar and 10 cents in Australian currency sit atop a U.S. one dollar note in this photo illustration taken in Sydney July 27, 2011. Reuters/Tim Wimborne

Bell FX Currency Outlook: The Australian Dollar has squeezed higher overnight as risk sentiment improved on US Data and rising commodity prices.

Australia: AUD and NZD squeezed higher in step as risk sentiment improved. The driver was improvement in US data, particularly the PPI and industrial production, as well as rising commodity prices. Oil rose on
little more than comments from Iran’s Oil Minister welcoming the potential of cooperation between producers. This fed into the AUD, with just the slightest hint of a return to carry trade enabling the AUD and NZD to perform well. The CAD is also higher, as are NOK and RUB. Base metals were little changed, as was gold. Looking at today’s employment data, the markets are looking for some stabilisation in the January figures, with consensus beig a lift in employment of ~ 15,000 jobs and stable unemployment at 5.8%. That said, these figures can be somewhat controversial in their surprise factor. Australian labour force data will be
released at 11:30am AEDT and ANZ NZ consumer confidence is out as well. The market is expecting continued improvement in global sentiment but USD weakness should be limited given firmer US data, which in turn may cap this latest bounce in the AUD, potentially meaning that key 0.7220 level remains a strong resistance point.

Majors: To the majors, and continued improvement in risk appetite as US data surprises to the upside was the main feature. The release of the FOMC Minutes did not have any impact on markets. The minutes of the
January FOMC meeting reflected the tone of the Statement that recognised the downside risks to growth and inflation from the equity and credit market weakness at the start of this year, and the increase in volatility and weakness in the oil prices. Stronger-than-expected US industrial production growth in January indicated that activity maintained momentum in the face of heightened financial market volatility. The bank of England’s Deputy Governor speaks tonight, as does San Francisco Fed President Wiliams. Not a big night for data, and the EU Summit on the refugee crisis commences.

Economic Calendar 18 FEB

  • JN Trade Balance Jan
  • AU Unemployment/Employment Change Jan
  • CH CPI Jan
  • US Philadelphia Feb Business Outlook Feb

Bell Fx

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