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 once again rallied overnight, making new highs above 0.7200.

Australia: The AUD is trading around 72 cents against the USD, having touched a high of 0.7242 last night, its highest level since the first trading day of 2016 (4/01/16). Yesterday was relatively quiet, with the currency
remaining around the 0.7150 - 0.7190 range, before another strong rally overnight. Broad USD weakness was again the driver, with futures now not pricing in another price hike until August. The USD did make back
some ground late in the session as the recent move began to look overrun. The Bloomberg spot dollar index had eased 0.6% by the close, the USD’s fourth successive day of losses. The RBA’s Statement on Monetary Policy to be released today at 11:30am AEDT. This will be watched closely, especially given what appeared to be a slight tilt toward a stronger easing bias in the Bank’s post-meeting statement earlier in the week. Australian retail sales data will also be released at the same time.

Majors: In the UK the Bank of England voted 9-0 to leave interest rates unchanged and stressed the depressing effect that weak oil prices and earlier sterling strength have had on inflation, which is being reinforced by weak domestic cost developments. Inflation is expected to spend most of this year below 1% but Carney said that the entire MPC expects that the next move in interest rates will be up. The GBP initially strengthened before retracing most of the move to remain broadly unchanged overnight (one of the few currencies not stronger vs the USD). In Europe ECB President Draghi took the opportunity to reiterate the case for easier monetary policy stating that “the longer inflation stays too low, the greater the risk that inflation does not return automatically to target”. Despite this the EUR was once again up against the USD. It’s all about US non-farm payrolls tonight and a nervous USD market today. Expectations are for a +190k result.

Economic Calendar 05 FEB

AU RBA Statement of Monetary Policy
AU Retail Sales
US Change in Non-Farm Payrolls
US Consumer Credit

Bell Fx

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