Australian Dollar Outlook - 03/12/2012

Aussie slips against the US$ on the back of Greece reaching a solution which has averted a technical default.

Australia: The Aussie Dollar sold off against the US overnight and is currently trading at 1.0570. China had two releases on Friday, the PPI which came in at 0.0, lower than the forecast of +.01% YoY, and lower than the previous months +0.7%. The CPI printed at +3.2%, also lower than the +3.4% expected and the prior +4.5%.

These numbers will add to the debate of further interest rate easing by the Chinese Central Bank.

Commodities generally had a good night with base metals rallying almost across the board. Copper rose 2.0%, nickel ended up 2.7% and ally rose1.6%.

Gold ended the session up US$15.50 to be trading at US $1,711.50 an ounce for the April Futures while oil is trading at US$107.40 a barrel.

There is no local Australian data due for release today and it is a Labour Day Holiday in VIC, TAS & ADL

Majors: US Treasury yields were again higher for third day in a row while US equity markets ended up slightly. Friday night saw the release of the US Non -farm Payrolls for February which reported a rise of 227,000 better than the market expected for a rise of 210,000 raising optimism for a US recovery.

The US unemployment rate is now at 8.35% which is at a three year low. The USD further strengthened against most currencies, extending gains against the Euro and rising to a 10 month high against the Japanese Yen after the jobs numbers. Greece announced that the deal to swap Greek bonds for new ones with a big haircut (75% NPV) was accepted by 85% of Greek law bond holders and the Government triggered the retrospective collective action clause which meant that a total "acceptance "was 95.7%.

Equity markets in Europe reacted positively after Greece managed to finalise a successful debt swap deal with Frankfurt
+0.7%, Paris +0.3% and London +0.5%.

The International Swaps and Derivatives Association (ISDA) said that "we do not foresee a significant impact of the Greek credit event on financial markets" because the exposures, were relatively small, publicly known and mostly subject to
collateral.