The US dollar looks to give in to a slight boost in risk confidence in the markets today and pare Friday’s gains over the Australian currency. An upbeat outlook for the US economy this year by Chicago Federal Reserve President Charles Evans has the markets anticipating a flat-to-higher open on Wall Street, and a weaker Greenback today.
Speaking at the Asian Financial Forum in Hong Kong earlier today, Evans forecast that the US will grow by 2.5 percent in 2013, rising to 3.5 percent in 2014. The speech was his first since mid-2011 in which he did not make an explicit call for further monetary easing. Evans was less sanguine on unemployment however, forecasting a rate of 7.4 percent in 2013, easing slightly to 7 percent in 2014.
Investor focus today is also seen to be on the speech by Federal Reserve Chairman Ben Bernanke speech at the University of Michigan. Bernanke is perceived to discuss the debt ceiling issue as well as the fiscal cliff. Though today is seen as a quiet day in the nascent earnings season, some positive risk sentiment is anticipated. PPG Industries is one of the few companies of interest reporting before the start of the US trading session.
On the prospects of higher-yielding investments, Asian stocks were slightly higher today, helped by a 3 percent boost in mainland Chinese shares amid the light trading volume. The FTSE CNBC Asia 100 index inched up 0.1 percent. China shares rebounded on Monday to close at their highest level since June after a top securities regulator said Beijing could significantly increase the quota for foreign investors to invest in mainland markets. Australian shares inched up 0.2 percent on Monday as investors turned their eyes toward the US corporate earnings season.
Considering these fundamental data, a buy position is advised for the AUDUSD. Again, be cautious of the day’s trades and look out for probable spikes in price activity.
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