Australian Dollar Outlook - Feb. 9, 2016

Bell FX Currency Outlook: With China off for New Year holidays this week any move up in Australian Consumer Confidence readings today should support further stability for the AUD.

Australia: Led by Global forces, the Aussie has been dragged down by Oil prices falling just over 3.0% overnight, now under US$30 a barrel. There is also speculation that the Fed may ultimately have to join other
central banks and adopt negative rates. The market will focus on Yellen’s testimony to Congress on Wednesday-Thursday, when Yellen is expected to sound a more cautious tone. Hopes of a coordinated supply cut from OPEC and non-OPEC members continue to fade. Meetings led by Venezuela have failed to garner any interest, with Saudi Arabia the latest to baulk. Interest is now turning to the US, with the market expected to scour for any potential changes in expectations of US supply in EIA’s short-term energy outlook report.

Majors: There is a question over China’s ability to control its currency, even though the fall in FX reserves released over the weekend was smaller than expected. The BoJ move into negative territory has not had a
lasting effect and this lack of belief was little help by the Bank’s release of “summary of opinions” from its last policy meeting. The comments revealed that some members within the committee feared negative rates could backfire as financial institutions worried about the risk of further cuts with one member noting that the BoJ’s introduction of negative rates could “lead to a competition with other central banks in other countries”.

Economic Calendar 09 FEB

• AU HIA New Home Sales Dec
• AU NAB Business Confidence/Conditions Jan
• FR IEA Oil Market Report Feb
• US NFIB Small Business Optimism Jan

Bell Fx

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