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 RBNZ is the story of the morning, assisting AUD to recent highs of 0.7528, despite iron ore prices falling.

Australia: Overnight the AUD jumped above 0.7500, despite iron ore prices tumbling almost 9.0%, USD6/tonne on renewed concerns about the supply and demand imbalance. The AUD surged amid a rise in oil and base metals. JPY weakness and AUDJPY trading above 85.00 saw the AUD set a new trend high at 0.7528. Broad USD strength in late NY saw the AUD trade back near 0.7480. We have the European Central Bank rate meeting tonight, which could have an influence on where the AUD/USD opens up tomorrow.

Majors: RBNZ cut the cash rate by 25bps to a record low of 2.25% and flagged that further easing may be required. This was the catalyst for a significant fall in the currency, with the AUD/NZD spiking 2% higher. The USD was generally weaker overnight as commodities firmed. Two factors were key in the RBNZ decision: a more fragile looking global scene (though reasonable growth is still expected); and the recent decline in inflation expectations. Despite acknowledging that long-term measures have remained stable around 2%, it noted that “there has been a material decline in a range of measures”, weaker growth in China, emerging markets and Europe. The Bank of Canada left policy rates unchanged at 0.50% as widely expected, and the tone of the accompanying statement was little changed from January’s.

Economic Calendar 10 MAR

  • AU Consumer Inflation Expectations Mar
  • CH CPI/PPI Feb
  • EC ECB Interest Rate Decision Mar
  • US Initial Jobless Claims

Bell Fx

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