Australian Dollar Outlook - Feb. 19, 2016

Bell FX Currency Outlook: The Australian Dollar is trading slightly lower this morning following yesterday’s disappointing employment data.

Australia: The AUD is currently trading around 0.7155, right in the middle of yesterday’s range (0.7180-0.7135). Yesterday’s unemployment data missed expectations, with employment falling 7.9k in January (+15k expected) and the unemployment rate jumping to 6% (from 5.8%). The AUD fell away on the announcement, dropping about 45 points to a low of 0.7135. However the currency quickly found support, making back much of the initial selloff over the course of the afternoon. This is perhaps a sign that the employment data is again being taken with a pinch of salt. Indeed the weakness in yesterday’s labour force report should be heavily discounted just as the previous outsized gains in employment were treated with equal skepticism. Measured employment growth was still a strong 24k per month in the six months to January. It looks to be a quiet day ahead, with no economic releases out of Australia and in Asia only Japan’s all industry activity index is on the slate.

Majors: The majors also had a quiet night. News that the Saudi Foreign Minister would not support a freeze in oil production has dashed hopes of a production slowdown. Following this news Oil gave back earlier gains
and is little changed for the session, with commodity currencies also coming under pressure in late trading. GBP has had a whippy session as the EU Leaders Summit started its 2 day meeting. The main focus of this
is whether UK Prime Minister David Cameron can gain the concession he wants in order to campaign against a ‘Brexit’ in the upcoming referendum (to be held before the end of 2017). In other news the OECD cut its global growth forecasts, saying the economies of Brazil, Germany and the U.S. are slowing and warning that some emerging markets are at risk of exchange-rate volatility. Global gross domestic product will expand 3.0
percent in 2016, the same pace as in 2015 and 0.3 percentage point less than predicted in November. Apart from the second day of the EU Summit, tonight also sees the release of UK retail sales, US CPI and there are a
couple of Fed speakers in Mester (voter) and Williams (non-voter).

Economic Calendar 19 FEB

• JN All Industry Activity Index Dec
• AU ECB’s Constancio speaks in New York
• US Fed’s Mester to speak at Global Interdependence Centre
• US CPI Jan

Bell Fx

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