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: Iron ore is up USD10/tonne, helping the AUD approach the 0.75 level; both are at fresh 8 month highs while most other currencies saw little change.

Australia: It was all about iron ore. There was an 18.5% rise in iron ore prices overnight. The extent of its biggest gain in daily data in its history (started 2009) appears to be a short covering rally, supported by a combination of the recent policy measures in China’s housing market, continued moves to restructure the Chinese steel industry, and the progrowth rhetoric coming out of the weekend’s NPC. This followed China’s National People’s Congress meeting over the weekend showing commitment to supporting economic growth, which markets interpreted as a positive for the outlook for steel consumption, which then washed out short positions. Globally, the focus today will be on China’s trade figures. Locally, we will look to business confidence, but this is likely to play second fiddle to commodities and China data.

Majors: Overnight Brainard continued the dovish tone from FOMC officials, stressing that risks remain to the downside and that caution is required for further policy tightening. Not as rosy in NZ with Fonterra Coop, who is the world’s biggest milk producer – announcing milk price forecast cut to a 9 year low. The announcement comes as a blow to NZ dairy farmers. The announcement comes only 2 days before RBNZ rate decision, and sent NZD lower as soon as the news broke. More comments from BoJ Governor Kuroda, talking of the possibility of further monetary easing, even though he recognised the negative spill over to banks’ earnings. His retort to that was to beat deflation and thus ultimately lift earnings. Final GDP is expected to confirm a recession in Japan, while Balance of Payments data should highlight a robust current account surplus.

Economic Calendar 08 MAR

  • AU NAB Business Confidence/Conditions Feb
  • CH Trade Balance Feb
  • EC GDP Q4 US NIFB Small Business Optimism Feb

Bell Fx

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