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 did little overnight, and is unlikely to do much today given Monday’s Memorial Day holiday.

Australia: The AUD is a little higher this morning, having rallied to an overnight high of 0.7243, boosted by further strength in the crude oil price as Brent and WTI front-month futures both pushed above $50 a barrel in early European trade. Oil did give back these gains, with Brent finishing down 0.5%, but the AUD (along with other commodity currencies such as NOK and CAD) held onto most of these earlier gains, currently trading around 0.7220. Yesterday’s big news was the release of Capital Expenditure (Capex) data, which fell 5.2% to $30.613 billion in the March quarter after seasonal adjustments, missing expectations for a smaller decline of 3.5%. The AUD dipped on the news, but quickly recovered before moving higher during afternoon trade. This is possibly down to spending on equipment, plant and machinery – a direct GDP input – falling only 0.5% to $11.753 billion, beating expectations for a decline of 2%. Also there was better news when it came to the outlook for business investment as the second estimate for 2016/17 CAPEX came in at $89.2 billion, 6.3% higher than the first estimate. It is a quiet day for data, with Japan CPI the only release of note during the APAC session.

Majors: The USD weakened slightly as markets consolidated overnight, with the EUR and JPY modestly stronger. On the data front US durable goods orders rose 3.4% in April and March’s gain was revised to +1.9% vs +0.8%. However, core orders (ex-transport and defence) fell 0.8%, suggesting that business fixed investment is still struggling. The UK GDP headline figure was at 0.4%, as expected, but the weak business investment numbers saw the GBP trade lower over the session. Iron ore has continued to tumble, with the spot price for benchmark 62% fines down by a further 1.84%, or 93 cents, to $49.48 a tonne, leaving its decline from April 21 at 29.8% (the first time the benchmark price closed below the $50 a tonne level since February 29). As stated above, oil rallied above $50/bbl before hitting strong resistance. The NOK was the big outperformer on this, up 1%. It is all about the US tonight with the second reading on US Q1 GDP before Fed Chair Yellen herself because the latest in a long line of recent Fed speakers.

Economic Calendar 27 MAY

  • US GDP Annualized QoQ
  • US Fed’s Yellen to Speak at Harvard’s Radcliffe Day
  • AU RBA’s Debelle in Panel Participation at the ACI FMA
  • CH Industrial Profits YoY

Bell Fx

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