FOREX

A smaller than expected expansion of the Chinese manufacturing sector caused share markets to slip during Asian hours and the Australian dollar lost 20 points on the initial release.

The Australian dollar has held onto most of its gains since markets rallied on Friday; however caution ahead of some key risk events in the second half of this week has seen it dip back below 1.0500 in the early hours of Wednesday morning.

The Australian dollar has continued higher in the current risk-on environment, breaking 1.0500 against the Greenback for the first time in four months and touching new all time highs against the euro.

The Australian Dollar rallied strongly into the close of the week, as increased faith in the recovery plan for Europe made for a risk-on playing field.

Following a heavy week of local data releases the Australian dollar rebounded in overnight trade racing to recover all of the week’s earlier losses.

In what proved to be a slightly softer than expected reading Australia’s headline Consumer Inflation accelerated to 0.5 percent in the second quarter this year, taking the annual rate up to 1.2 percent.

The Australian dollar was initially boosted yesterday following the release of the HSBC’s PMI which showed China’s manufacturing activity contracted at its slowest pace in five months

In what proved to be a tumultuous week for the Australian Dollar with ranges of more than five US Cents being witnessed a sense of normality was temporarily restored throughout the foreign exchange market on Friday.

Bell FX Currency Outlook: The Australian Dollar has retreated from its recent highs over 1.0400 to begin trading this week in the mid 1.0300's as news from Europe continued to dominate the financial headlines.

Nervousness around Europe and speculation of soft CPI data ahead has sent the Australian dollar lower into the close of last week, falling from earlier levels above $1.0400.

The Australian dollar continued its advance yesterday, strengthening to its highest level in 11 weeks against its US Counterpart.

Commodity currencies were the main benefactor following the second day of Ben Bernanke’s testimony to congress, which combined with the acknowledgement of a weakening US economic recovery, QE3 rumours started flying.

After dipping towards 1.0200 yesterday the Australian dollar has returned to its opening levels for the week following speculation the US central bank may need to provide stimulus following some disappointing US economic indicators overnight

Bell FX Currency Outlook: The Australian Dollar has opened above 1.0200 following Friday's Chinese Q2 GDP data and rallying equity markets Friday night.

In a largely risk-off week the Australian dollar did well to close up above $1.02 Friday night, as data from China and the United States gave rise to a last minute sentiment-based rally.

Triggering a large sell-off in the Australian dollar yesterday, Australian employers unexpectedly reduced payrolls in the month June.

The Australian dollar consistently strengthened throughout yesterday’s local session after a private report showed consumer confidence rose to a five-month high in July.

Concern grew yesterday that Chinese growth is likely to slow over the coming quarter after data showed inbound shipments rose by an unflattering 6.3 percent in the month of June, almost half of the 11 percent increase forecasted.

The Australian dollar traded lower for much of yesterday' session as data flows out of China, Japan and the US all pointed towards a slowdown in global economic growth.

Following a relatively flat start to the day the Australian Dollar fell as European and US Markets opened amid renewed concern that interest rate cuts around the globe last week will not be enough to trigger a spur in demand.

Some stellar Australian retail sales for the month of May added to the recent chain of positive economic releases and the Australian dollar rallied accordingly.

The Reserve Bank of Australia left rates on hold yesterday stating they had already delivered ‘material’ easing over the past six months, that Europe still remains a risk and that domestic inflation remains ‘consistent with the target’.

The Australian dollar struggled to hold onto modest gains intraday yesterday after a survey showed inflation has fallen to its lowest level since 2009.

Bell FX Currency Outlook: The Australian Dollar has opened this morning firmly above 1.0200 after a breakthrough in the EU summit in Brussels late last week. European bailout funds will be directly lent to Spanish banks (rather than to the Spanish government).

The Australian dollar jumped higher on Friday as European leaders finally made headway in unifying the European banking sector and working towards calming the area’s debt crisis.

Whilst Asian share markets enjoyed some solid gains in early morning trade yesterday boosting the Australian dollar to a late afternoon high of 1.0125 against its US Counterpart, initial optimism turned to scepticism as the higher yielding asset entered the offshore session.

Nervousness in the markets ahead of the EU summit has been offset by encouraging US fundamentals last night and the net effect on the Australian dollar was positive.

The Australian dollar has gained ground over the last 24 hours as market participants speculate the RBA will keep rates on hold when they meet next Tuesday.

It was a similiar story for the Australian dollar yesterday as investors appeared reluctant to hold long positions in the currency deemed to be riskier in nature.