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 Australian Dollar is weakeragainst the Greenback, which has risen after the Federal Reserve Chair hinted a December interest rate increase is likely.

Australia: The AUD is trading below USD 0.7150 which is 50 point slower than late yesterday. The move was prompted by the response ofthe financial markets to Chair Janet Yellen’s testimony before the US House Financial Services Committee, where she confirmed a move on interest rates in December is a “live” possibility, providing economic dataholds up. Markets moved by pricing in a high probability of a move in December (from 50% to 60%), and this saw the USD appreciate broadly. Today, RBA Governor Stevens speaks at the 2015 Economic and Social Outlook conference in Melbourne and given the RBA board meeting isdone, he is expected to deliver the RBA’s latest thinking on the economyand forecasts ahead of tomorrow’s quarterly Statement on Monetary Policy.

Majors: Overnight, Fed Chair Janet Yellen affirmed the imminent tightening bias as long as economic data remained on track, sending the USD higher. She told the committee that “moving in a timely manner, if the data and the outlook justify move, is the prudent thing to do”. USD strength was given some impetus by a stronger than expected US ISM nonmanufacturing report, up from 56.9 to 59.1, reflecting what could only be described as a vibrant US service sector, encompassing a near sixpoint gain in the new orders index to 62, and the employment component pushing up further from 58.3 to 59.2. There is more happening with central banks late during our session with the BoJ publishing the Minutes of its October 6-7 meeting at 10:50 AEST and the BoE meeting with no change in policy expected. Eurozone retail sales are released although focus is more likely to be on the European Commission’s revised economic forecasts. ECB President Mario Draghi is also speaking tonight. Finally, the US has various Federal Reserve Governors busy making speeches across the country.

Economic Calendar 05 NOV

  • AU RBA Governor Stevens' Speech in Melbourne
  • AU RBA's Lowe Appears in Panel Discussion in Sydney
  • UK BoE Interest Rate Decision Nov
  • US Initial Jobless Claims Oct 31

BellFx

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