February 29th, 2012Published by:IBTimes3
Australian Dollar Outlook
In a quiet session overnight, the Australian Dollar held yesterday's gains as local financialmarkets await a raft of economic data to be released today and the all-important release of the European Central Bank's second round of Quantitative Easing. Australia: The main reason markets were quiet last night was the anticipation accompanyingtomorrow's ECB's release of the second round of its Longer Term Refinancing Operation(LTRO).Results will be known early tomorrow, with the markets expecting an uptake of betweenEUR300 and 500 billion, which compares with the EUR 489 billion in 3-year loans to 523Euro Zone Banks provided last December (that already feels a longtime ago).There are no arguments that financial markets have benefitted from this injection of liquidity,and this is being reflected in confidence measures in Europe which have shown improvedreadings and are trending in a superior fashion to last year's lows.Turning locally, Australia's economic data releases today include January retail sales, whichare expected to be weak again, and January private sector credit, which is expected to besoft as well. The other reading is construction work done in Q4, which is also expected tobe modest.We expect the AUD to continue its range trading today, with some potential for it to be soldon the back of the expected "weak" data releases.Majors: The EUR was sold to below 1.3400 against the Greenback when it was announcedIreland will hold a referendum on the EU fiscal compact but this news did not have a lastingimpact. It was felt this development is unlikely to derail the EU's fiscal treaty and "austeritydetermination".US Data was essentially mixed. Oil prices declined for the second consecutive night, oncontinuing fears that the recent rally in oil prices will damage global growth. Gold roseovernight, supported by the upcoming injection of liquidity by the ECB.However, the main game in town is the ECB's announcement of the LTRO. Analysts willstudy the take up by the 'weak' Euro-area banks, such as Spanish and Italian banks, to seeksigns that there has been an easing in funding conditions in the markets that have been hitthe hardest by the European sovereign debt crisis.Once this is done, the next focus will be the semi-annual testimony to the House by Chairmanof the US Federal Reserve, Ben Bernanke, and the release of the US Beige Book.
Australia Market Leads
Overnight leads from the U.S. and European marketsare to provide a boost to the Australian stock market onWednesday.The U.S. and European stock markets recorded freshgains overnight with the S&P posting 0.3% increase to1372 and the NASDAQ surged 0.7% to finish at 2987.The NASDAQ went up after Apple Inc. put in a stellar performance ahead of the launch of its new iPad.Analysts are quite excited of the encouraging changeseeing the US markets close above key levels (13,000 for the Dow and 1370 for the S&P).IG Markets strategist Mr. Stan Shamu said "investors willnow be hoping the market can hold at those levels as theyconsider fresh longs."Risk assets, according to Mr Shamu, were underpinned by hopes of a strong LTRO operation and this mightsupport the underperforming Aussie market today.He noted that it is also a welcome breather that crude prices continued to correct lower, which will be yetanother positive for equities."Some analysts are now fearing the big build-up for theLTRO operation later today makes the event vulnerableto end up being a 'buy the rumour, sell the fact' affair,"he warned.Analysts are positively hopeful that the Aussie marketwill move up between the range of 0.3% to 0.5%.On the economic front, Australia will release have newhome sales, retail sales, construction work done and private sector credit data. The economic data couldmake or break the Aussie dollar and it could be another interesting session.Worley Parsons and Harvey Norman are expected toreport their earnings today. With the reporting seasonwinding down, there would be a flood of earnings reportsfrom some companies still trying to release earnings before the deadline.
MarketPrice at8:30amAESTChangeSinceAustralianMarketClosePercentageChangeAUD/USD1.0775-0.0016-0.15%ASX (cash)4275120.28%US DOW (cash)13007-17-0.13%US S&P (cash)1373.010.07%UK FTSE (cash)5924.0-7-0.12%German DAX (cash)6886150.22%Japan 225 (cash)9791640.66%Rio Tinto Plc (London)37.310.290.78%BHP Billiton Plc (London)21.200.311.48%BHP Billiton Ltd. ADR (US) (AUD)36.570.822.29%US Light Crude Oil (Apr)106.46-1.95-1.80%Gold (spot)1785.013.00.73%Aluminium (London)2325.00-6-0.26%Copper (London)8600.00640.75% Nickel (London)19775.00-380-1.89%Zinc (London)2123.00251.19%