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FX DAILY REPORT

WEDNESDAY 30 NOVEMBER 2011

Bell FX Currency Outlook:
The Australian Dollar rose for the second consecutive overnight session last night, trading north through parity on some encouraging news out of Europe and stronger than expected retail sales data in the US.
Australia: The AUD has rallied as European leaders scramble to structure a plan at tonight’s meeting of the 17 EU Finance Ministers where there are reports that they will be discussing a greater role for the ECB and the IMF. This particularly refers to whether the ECB should channel funds to troubled Euro countries through the IMF. Here, the Federal Government yesterday published its Mid-Year Economic and Fiscal Outlook (MYEFO) in which it projected a surplus of A$1.5bn for 2012/13, which was less than its May budget forecast for a surplus of A$3.5bn. In all theory, there were few surprises. Net debt is expected to peak at 8.9% of GDP in 2011/12 which compares to the average net debt in G7 economies which is forecast to rise to 80% by the end of 2011. Nearly all are questioning the Government’s strategy (wisdom) to return a surplus next year given the ever present and real mounting global risks and is at policy odds with the likely relaxing of interest rate settings by the RBA in coming months. Today, Q3 private capital expenditure data is released ahead of Q3 GDP next week. A busy night awaits, with the US releasing ADP Employment, pending home sales, Chicago PMI and the Fed’s Beige Book. In Europe, CPI and unemployment data are out, as well as news from the Finance Ministers. We see AUD hovering at Parity, but watch out for more volatility, either way… Majors: The Eurozone Finance Ministers meeting is head of the agenda today. The meeting has already approved EUR5.8bn in funding for Greece while the Dutch Minister said the EFSF is falling short and needs to see a “greater role for the IMF”. Financial markets are definitely hoping for good structural decisions to be made, and the solid auction of Italian bonds added to the positive sentiment. Good news out of the US with the American consumer, who represents about 70% of that country’s GDP, looking more confident. A much larger than expected rebound in US consumer confidence to 56.0 (market 44.9 and last 40.9) certainly helped market sentiment. On the back of this, US Federal Reserve Vice Chair Janet Yellen stated “the scope remains to provide additional accommodation through enhanced guidance on the path of the federal funds rate or through additional purchases of longer-term financial assets”. They seem hell bent on their strategy to keep monetary settings unchanged for some time yet. What interesting times we live in.
Economic Calendar 30 NOV AUS HIA New Home Sales Oct

Australian Dollar / US Dollar
1.20 1.10 1.00 0.90 0.80 0.70 0.60
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11

Today’s Forecast Range

USD 0.9900 – 1.0050
Currencies AUD / USD USD / JPY EUR / USD GBP / USD NZD / USD AUD Crosses AUD / JPY AUD / EUR AUD / GBP AUD / NZD AUD / CAD Australian Rates Official Cash 3 Month Bill 10 Year Bond US Rates Fed Funds 3 Month Libor 10 Year Bond Commodities Gold (US$ / oz) Oil (WTI) US$/bbl) CRB Index Equities Last 1.0013 77.86 1.3328 1.5608 0.7619 Last 78.09 0.7513 0.6423 1.3137 1.0326 Last 4.50 4.60 3.85 Last 0.25 0.527 2.003 Last 1719.88 99.78 310.46 Last 4102 11609 5337 18256 8478 0.523 1.969 - / + (%) +0.4 +1.6 +0.8 - / + (%) +1.08 +0.7 +0.5 +1.2 +2.3 4.63 3.97 Previous High 1.0077 78.28 1.3442 1.5656 0.7651 High 78.28 0.7527 0.6442 1.3177 1.0359 Previous Low 0.9864 77.63 1.3286 1.5470 0.7512 Low 77.63 0.7425 0.6380 1.3101 1.0221

EU Euro zone CPI Nov US Fed Releases Beige Book Economic Survey
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