FX DAILY REPORT THURSDAY 19 MAY 2011

Bell FX Currency Outlook Australian Dollar / US Dollar

The Australian Dollar finds itself drifting in a tight trading
range, which is a bit of a first for quite some time.
1.15

1.05
Australia: As always in the last three years, there are a huge amount of 0.95
considerations in looking at our Dollar and considering how high can it go
0.85
and how long will it be this high? Some analysts are calling USD 1.7000 to
USD 2.000 in the next 18 months. We find that hard to fathom, especially 0.75

because at some stage, a couple of the key drivers for the AUD’s 0.65

ascendancy will change. Interest rate differentials and the growth rates in 0.55

China and India are what we refer to. Minutes from the April 26-27 FOMC Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11

meeting are the first sign since the GFC of the strategy of exiting the US
expansionary monetary policy, which has so contributed to the fall in the Today’s Forecast Range
USD. Equally of interest, a slowing growth in Asia is having an impact as
policy makers look to dampen inflation. Locally, today we have average
USD 1.0555– 1.0675
weekly ordinary time earnings data released which is typically not a big deal, Currencies Last High Low
as opposed to its distant cousin, the wage price index (WPI), which was
released yesterday, and is the market’s preference for analysing wage AUD / USD 1.0624 1.0666 1.0569
inflation. Yesterday’s release of the WPI showed an unexpected USD / JPY 81.64 81.73 80.94
deceleration in quarterly wage inflation to 0.8% (March was 1.1%) and
EUR / USD 1.4249 1.4288 1.4195
added to the recent run of weaker Australian economic data such as
employment, housing finance and consumer sentiment. One would suggest GBP / USD 1.6165 1.6288 1.6105
in light of this softer data and the very high A$, tightening of interest rates is NZD / USD 0.7888 0.7911 0.7840
hardly urgent…
AUD Crosses Last High Low
Majors: As mentioned above, the US Federal Reserve' s Monetary Policy AUD / JPY 86.73 86.87 85.75
Committee released minutes for its April 27 meeting last night and this was a AUD / EUR 0.7452 0.7465 0.7426
significant focus for currency traders during the offshore session. According
to the minutes, participants "generally anticipated that the higher level of AUD / GBP 0.6568 0.6577 0.6528
overall inflation would be transitory". While there had been "significant AUD / NZD 1.3463 1.3549 1.3429
increases" in energy and other commodity prices that had boosted overall AUD / CAD 1.0307 1.0357 1.0299
inflation, FOMC members expected price increases would ease once
commodity prices stabilised. Bank of England minutes reveal no change to Australian Rates Last Previous
the voting pattern. The EUR situation remains pretty much unchanged with Official Cash 4.75
pressure on Greece to solve their crisis. US equities rallied and US
3 Month Bill 4.99 4.98
Treasuries sold off as the FOMC outlined its thoughts. More interesting
times lie ahead for all of us in 2011 that’s for sure. 10 Year Bond 5.350 5.370
US Rates Last Previous
Economic Calendar
Fed Funds 0.25
19 MAY AU Average Weekly Earnings Fed Qtr
UK Retail Sales Apr 3 Month Libor 0.260 0.260
US Existing Home Sales Apr 10 Year Bond 3.180 3.114
US Initial Jobless Claims 1-May
Commodities Last - / + (%)

Important Disclaimer – This may affect your legal rights: This publication has been issued on Gold (US$ / oz) 1496.75 0.7
the basis that it is only for the information and exclusive use of the particular person to whom it is Oil (WTI) US$/bbl) 99.75 +2.9
provided by Bell Potter Securities Limited trading in the foreign exchange markets as Bell Foreign
Exchange (ACN 004 845 710). As this publication is a private communication to clients, it is not CRB Index 344.21 +2.3
intended for public circulation or for use by any third party, without the prior approval of Bell Foreign
Exchange. The Information contained in this publication has been obtained from sources considered Equities Last - / + (%)
and believed to be both reliable and accurate, and no responsibility is accepted for any error or
omission, that may have occurred, or for any opinion expressed. The Information is general in ASX 200 4693 +0.2
nature, and does not take into account, the particular investment objectives or financial situation of Dow Jones 12560 0.6
any potential reader. It does not constitute, and should not be relied on, as financial or investment
advice, or recommendations (expressed or implied), and is not an invitation to take up securities or FTSE 5923 +1.1
other financial products or services. No decision should be made on the basis of the information
without seeking expert financial advice. Ranges in this publication are indicative ranges over the Hang Seng 23011 +0.5
past 24 hours. Last is around 9.00am Sydney. Please speak with Bell Foreign Exchange if you
require latest pricing and ranges. Nikkei 9662 +1.0

Sally Fisher 08 8224 2771 sfisher@bellfx.com.au Bill Giffen 02 9255 7473 bgiffen@bellfx.com.au
Kimberly Limbert 08 8224 2725 klimbert@bellfx.com.au Scott Hill 02 8243 3504 shill@bellfx.com.au
Rebecca Kelly 08 8224 2772 rkelly@bellfx.com.au Bronson Livingston 02 8243 3503 blivingston@bellfx.com.au
Nick White 08 8224 2770 nwhite@bellfx.com.au Scott Fleming 03 9235 1912 sfleming@bellfx.com.au

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