Australian one dollar coins
A handful of Australian one dollar coins is shown in Sydney, February 18, 2004. Reuters/Tim Wimborne

Bell FX Currency Outlook: The Australian Dollar fell over a cent on Friday night as US data surprised to the upside.

Australia: The AUD was the worst performer of G10 currencies (closely followed by the NZD), down 1.5% on Friday night, currently trading around 0.7120. Some good US data was the main driver of markets (see below), suggesting that the US economy remains on a firm footing, and reaffirms the Fed’s intended continued tightening of monetary policy this year. A fall of 5% in iron ore for the past two sessions has also weighed on the AUD. New home sales data and private sector credit are released in Australia this morning, but the main events for this week are the RBA meeting tomorrow and GDP data on Wednesday. The NZD is weaker this morning following some disappointing building approvals data, which showed a fall of 8.2% in January.

Majors: As stated above, Friday’s US data flow was unanimously positive. There was an upward revision to Q4 GDP from 0.7% to 1.0%, largely driven by inventories. Net exports and investment were also revised to be less negative, while personal and government consumption were revised lower. Personal income and spending both rose 0.5%, while the core PCE deflator (the Fed’s preferred measure of inflation) rose 0.3%
m/m and 1.7% y/y. The final read of the University of Michigan sentiment index was revised higher from 90.7 to 91.7. US gained across the majors (the DXY rose 0.9%), although the moves against the GBP, EUR and JPY
were not as pronounced. The G20 meeting provided few surprises. Of note was the need to ensure debt to GDP ratios remain on a “sustainable path” and that member’s will refrain from any competitive currency
devaluation. Also Britain’s exit from the EU was added as an additional risk to the global recovery. The week ahead sees some more key data releases in the US, with manufacturing and non-manufacturing ISMs and
the all-important non-farm payrolls figure on Friday. Also of note, tomorrow is ‘Super Tuesday’ where we may end up closer to knowing the identities of both the Republican and Democratic presidential nominees.

Economic Calendar 29 FEB

  • AU Private Sector Credit MoM/YoY
  • JN Retail Trade YoY/YoY
  • JN Industrial Production MoM/YoY
  • US Pending Home Sales MoM/YoY

Bell Fx

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