Australian Dollar Outlook - 03/02/2012

Bell FX Currency Outlook: The Australian dollar has opened back above USD1.0800 this morning, as the European Central bank's second massive injection of cash buoyed sentiment in equity markets.

Australia: The AUD continues to be well supported due to firmer equity markets and improved risk appetite following the larger take up on the European banks in the LTRO the other day. The AUD is also strong on the cross rates with the AUD/EUR trading above 0.8100 while the AUD/JPY is just under the 88.00 level. Gold increased following yesterday's sharp dip encouraged some buying increasing 1.4% to close at USD 1,721.30.

Base metals mostly increased with Copper rising 1.5% on the improved Chinese data whilst soft commodities were mixed. Brent Crude rose above $126 a barrel overnight as solid US data and Chinese data showing stronger than expected factory growth in February along with continued Middle East tensions drove expectations of strong oil demand.

Chinese PMI has increased for a third straight month rising to 51.0 from 50.5 the previous month.

Majors: European shares ended the session higher with Euro Stoxx finishing 1.5% higher at 2549, and the German Dax up 1.3% to 6942. US stocks recouped losses from Wednesday as jobs data continued to show signs of an improving American labour market.

The S&P closed up 0.3% to 1370 whilst the Dow ended flat at 12967 after breaching the major psychological barrier of 13,000 on Monday.

The downward trend continued with US weekly jobless claims falling to 351k from 353k last week. Manufacturing data however, unexpectedly cooled in February falling to 52.4 compared with 54.1 previously.

Consumer spending figures also disappointed for January coming in flat for a third straight month keeping gains in equities muted.

Comments from US Fed Chairman Bernanke failed to inspire markets at his second day of testifying as his remarks were mostly a repeat of the prior day's testimony, where he stopped short of signalling a further easing of monetary policy.

The EUR/USD was down slightly 0.1% at 1.3312, falling in volatile trading on initial concerns over US economic data. Demand for European bonds grew as the ECB injected nearly 530 billion euros into banks. Eurozone bank shares rose 2.6% after French and Spanish government borrowing costs fell at auctions and yields on Italian notes dropped following the injection of cash

Economic Calendar

2 MAR JN National CPI JAN

EUR Euro-zone PPI JAN

UK PMI Construction FEB


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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