Australian twenty dollar notes
A sheet of uncut Australian twenty dollar notes are displayed at the Reserve Bank of Australia in Sydney, October 28, 2008. Reuters/Tim Wimborne

Bell FX Currency Outlook: The Australian Dollar has rallied strongly, commencing with yesterday’s stronger-thanexpected Q4 GDP before continuing overnight with the improvement in risk sentiment.

Australia: AUD built on Q4 GDP gains overnight, appreciating against most crosses. Better US data flow continued to support the improvement in risk appetite in financial markets. In the US, a strong ADP report
suggests a bumper non-farm payrolls release on Friday. US data refuses to roll over, once again raising the probability the Fed will proceed with its cautious monetary policy normalisation. Sentiment has clearly turned for commodities in the last fortnight. Both crude oil and iron ore prices closed at new highs overnight. The price action in oil adds to the case that the bottom in the crude oil market could now be in place for 2016. Tomorrows US payrolls is looming as the main test for the sustainability of the AUD’s rally overnight.

Majors: EUR remained under pressure as the ECB’s Coeure outlined the case for further easing. GBP jumped, reversing oversold indicators. In the ongoing US primaries, Donald Trump and Hillary Clinton solidified their positions on Super Tuesday. With Super Tuesday's results, the political scenarios for nominations have narrowed. The polls still suggest the Democratic nomination is Clinton's, while the Republican nomination could be more contested. Investors have expressed concern about the lack and
direction of policies from both parties, and it appears the markets have priced in a Democratic victory if the election is between Clinton and Trump, given early polling data. The remainder of the week will see the ISM nonmanufacturing index on Thursday and the above-mentioned non-farm payrolls on Friday.

Economic Calendar 03 MAR

  • AU Trade Balance Jan
  • CH Caixin Services PMI Feb
  • EC Services PMI Feb
  • US ISM Non-Manufacturing PMI Feb

Bell Fx

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