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Bell FX Currency Outlook:
The Australian dollar is largely unchanged this morning as the market awaits developments out of Greece.
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Australia: Despite a small bounce yesterday afternoon, when the AUD recorded a move close to USD1.0850, the AUD has failed to find any further support to break higher. Key resistance is just below the USD1.0900 level, and we'd need to see a break of this level to open the way for a move back towards USD1.1000.
The Reserve Bank's decision to leave official interest rates unchanged earlier this week has clearly increased the relative attractiveness of the AUD, particularly given the low levels of official interest rates throughout the rest of the developed world.
If the AUD continues to rally, and if we were to sustain levels above USD1.1000, the RBA may come under increasing pressure to cut interest rates to try and relieve some of the pressure on Australian exporters, as well as local businesses in manufacturing, tourism and retail who, on a combined basis, employ over two million workers.
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Majors: Greek political leaders remain locked in talks with the Greek Prime Minister Lucas Papademos over terms of the Greek bailout. Terms of the agreement are set to include large spending cuts with big reductions in pension payments and a 20% reduction in the minimum wage.
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An emergency meeting of Euro-area finance ministers is due to take place in Brussels tomorrow where it is hoped the bailout package will be approved.
Financial markets have remained relatively subdued overnight as we await developments out of Europe. The problems in Europe continue to weigh on the EUR, with the common currency losing close to 4% over the last 3 months. During tonight's session markets will be awaiting rate announcements from both the BoE and the ECB.
Economic Calendar
09 FEB AU NAB Business Confidence Q4 2011
JP Consumer Confidence JAN
CH CPI and PPI JAN
EU BoE and ECB Interest Rate Announcement
