International Business Times

By Christine Gaylican | April 11, 2012 17:17 GMT

Australian Dollar Outlook - 04/12/2012

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Australian Dollar Outlook - 04/12/2012

Bell FX Currency Outlook: A turnaround in market sentiment overnight has seen the AUD rally to back above USD1.0300.

Australia: Overall financial markets were a little more positive throughout last night's trading session following slightly better news out of both Europe and the US.

The AUD was initially sold down to USD1.0226 yesterday morning, its lowest level since Jan 9th, but found some support upon the release of better than expected housing finance data and subsequently rallied throughout most of the afternoon session.

The AUD was further supported throughout the night and is looking relatively well bid this morning ahead of this morning's release of labour data for March. Market expectations are for a 6.5k increase in the number of employed, with the unemployment rate expected to tick up slightly to 5.3% from 5.2% in February.

The data will be watched closely as it is one of the key indicators of how the Australian economy is performing and will help guide the market's expectations on RBA monetary policy.

While a 25bp cut in official interest rates at next month's RBA meeting is largely already priced in by the markets, a bad result on employment would increase the potential for further easing in the short term.

Majors: Euro-zone bond yields eased a little overnight as investor sentiment about the European debt crisis turned a little more positive. The market's focus has moved in recent times from Greece onto Spain, with Spanish 10 year bond yields rising close to 6% over the last few days.

ECB Board member Benoit Coeure managed to calm market nerves by suggesting the bank may restart its bond buying program. In the US, the release of the Federal Reserve's Beige Book reinforced the view that the US economic recovery is pretty firmly entrenched.

Within the release, the Fed stated that the US economy continues to grow at a "modest to moderate pace". The more positive tone from the Fed sent equity markets higher and the USD lower against most of the other major currencies.

Economic Calendar
12 APR AU Employment Change MAR
AU Unemployment Rate MAR
US Trade Balance FEB
US PPI MAR

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