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 overnight US data (the January PCE revision in particular) has had the effect of pulling the US dollar lower, providing support for the AUD.

Australia: Easter was marked by a general firming in the USD, driven by Q4 GDP and further hawkish remarks by Fed speakers. However, last night’s personal consumption report saw some of this USD strength unwind. The AUD will continue to trade with global sentiment and commodities. Tonight Yellen’s speech is the main event, while key data risk is up later this week with US Payrolls, ISMs, and global PMI results. All of these could drive added volatility. The market is now pricing in only a 1 in 10 chance of an April U.S rate hike. The market eyed sub 0.7500 levels over the long weekend, though no follow through was seen.

Majors: The core PCE deflator, the Fed’s preferred measure of inflation, rose 0.1% m/m in February. This was below market expectations and follow’s January’s 0.3% m/m gain. In annual terms, it held at 1.7%. This is still above the Fed’s 1.6% forecast for the final quarter of this year, however the fact that it undershot expectations could keep the debate about whether the recent lift in core inflation will be sustained alive. US personal income and spending growth for February were in line with expectations (at 0.1% m/m), but spending growth for January was downgraded to 0.1% from 0.5%.

Economic Calendar 29 MAR

  • JN Retail Sales Feb
  • JN Small Business Confidence Mar
  • US Fed Williams Speaks in Singapore
  • US Consumer Confidence Index Mar

Bell Fx

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