Australian Dollar Outlook – April 15, 2016
Bell FX Currency Outlook: The Australian Dollar is higher this morning following yesterday’s positive employment data.
Australia: The AUD is trading just below the 77 cents level this morning, off overnight highs of 0.7735. As stated above, the labour market report beat expectations, with the underlying trends in employment and unemployment continuing to defy the pessimists. Employment grew by 26.1k for the month, beating expectations of a 17k increase, while the unemployment rate dropped from 5.9% to 5.7%, a three year low. Part time employment was the driver, rising by 34,900 to 3.7292 million, the highest level on record. Offsetting that increase, full time employment dipped by 8,800 to 8.1804 million. The trend improvement in the unemployment rate for more than a year now is reflective of stronger growth. Following the release the AUD saw a small spike but quickly retraced, remaining in a relatively tight 40 point range for the day, before pushing higher overnight. The AUD has also been supported by rising iron ore prices, which are up over 8% this week. Coming up today is some important activity data out of China; retail sales, industrial production, urban investment and GDP are all slated for a midday release AEST. Domestically we also have the Financial Stability Review from the RBA. Although this isn’t expected to move markets, commentary on the state of the housing market will be keenly followed.
Majors: It was a mixed night for the USD, with CPI data slightly missing expectations, rising 0.1% (0.2% expected) before initial jobless claims fell to 253k for the week, their equal lowest level since November 1973. The GBP came under pressure as the BoE left rates on hold. This was entirely expected but the Bank also expressed concerns over the potential ‘Brexit’ fallout. Yesterday the SGD sharply weakened against the USD as The Monetary Authority of Singapore (MAS) surprised the markets in early trade, adopting a neutral stance towards the Singapore dollar nominal effective exchange rate (S$NEER) policy band. Previously the MAS had stated that it would keep the S$NEER “on a modest and gradual appreciation path”, indicating that it was willing to allow the Singaporean dollar to gradually strengthen against a basket of major currencies. The NZD was one of the worst performers as the RBNZ confirmed its surprise decision to cut rates last month was leaked by a journalist to colleagues and to an economics blogger. Tonight Eurozone trade balance, US industrial production, the UoM Consumer sentiment survey and a speech from the Fed’s Evans will be the main areas of focus.
Economic Calendar 15 APR
- CH Industrial Production YoY
- CH Retail Sales YoY
- AU RBA Financial Stability Review
- US Industrial Production MoM