One dollar and 10 cents in Australian currency sit atop a U.S. one dollar note in this photo illustration taken in Sydney July 27, 2011.
One dollar and 10 cents in Australian currency sit atop a U.S. one dollar note in this photo illustration taken in Sydney July 27, 2011. Reuters/Tim Wimborne

Bell FX Currency Outlook: The Australian Dollar is trading around 0.7000 after an interesting night in which the USD wasthe main driver.

Australia: After a quiet day yesterday it has been an interesting night for the AUD, which is currently trading around the 0.7015 level. The currency reached a low of 0.6942 during European trading before some disappointing data in the US saw a bounce. Earlier this morning the AUD was as high as 0.7040 before a speech from Janet Yellen saw buying come back into the USD. In her speech Ms. Yellen laid out her most detailed case yet for the central bank to begin raising short-term interest rates later this year, effectively lobbing a warning to financial markets that the central bank's decision to keep rates near zero last week wasn't a shift toward an interminable delay of monetary tightening. These comments saw the AUD drop back to 0.6980 before again recovering to currentlevels. Pre-Yellen, the best performer overnight was the NZD, up 1.22% in the wake of yesterday’s announcement from Fonterra increasing itspayout, a hint to more confidence in the outlook for milk prices. Japanese inflation data is the main watch point this morning with the national CPI forAugust, Tokyo CPI for Sep.

Majors: As stated above, disappointing data saw the USD weaker beforethe Yellen speech last night. US durable goods orders fell 2% in August, offsetting July’s 1.9% gain. Core orders ex-defense and aircraft fell 0.2% following July’s strong 2.1% gain. The modest trend recovery in capex remains intact. Encouragingly, August new home sales rose 5.7% m/m to552k, a new high. Strong and improving consumer fundamentals are supporting the recovery in the housing market. The German IFO index for September rose to 108.5 from 108.4 in August, which saw the EUR make early gains before giving them all back to finish the session flat. The worst performer last night was the NOK, following the decision by the NorgesBank unexpectedly cut its policy rate by 25bps to 0.75%. Equity markets were under pressure, with all major bourses in Europe and the US closing lower. Tonight the main news items are US GDP and a speech by Fed President James Bullard (a non-voter this year and next).

Economic Calendar 25 SEPT

  • US Fed Chair Yellen delivers lecture
  • JN Natl CPI/Ex Fresh Food & Energy YoY
  • US Fed’s Bullard speaks on Monetary Policy (NV)
  • JN PPI Services YoY

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