Daily Outlook

With the Easter holiday period winding up, it was a relatively quiet start to the trading week. The US economy will be a key area of focus this week with US data releases dominating the economic calendar. The US continues to show positive signs of recovery with GDP expected to rebound above the 2.0% level. Despite last week’s Q4 GDP beating expectations by 0.4% (1.4% versus 1.0%), soft consumption data and a lower than expected February core PCE result (rise by 0.1%) is driving US dollar weakness.

There appears to be a divide in thinking within the Federal Reserve ranks with President Bullard talking up the prospects of the US economy while President Williams urges caution. Williams emphasized the potential for performance in the economies of Brazil and China to damage domestic inflation and employment goals.

With Fed Chair Yellen speaking early tomorrow morning and NFP released later in the week, eyes will look to the US for economic clarity in this uncertain environment. Undeterred by the Fed’s recent dovishness, analyst expectations remain on two rate hikes this year. Risks still remain to the downside however, making the timing of future rate hikes difficult to predict.

The Australian Dollar is currently trading at 0.7560 at time of writing. The AUD has posted gains against the greenback despite mixed performance in commodities. Brent and WTI continue to consolidate lower as expectations of a production freeze by major producers begin to weaken. Iron ore continue to fall while Gold consolidates higher around the $1218-$1220 level.