Australian Dollar Outlook Feb 1

Australia: The Australian dollar has opened up weaker again this morning after continued risk selling in offshore trade pushed the local currency down to 0.8800.

Despite the continued positive local data releases and the surprising strength of the Australian economy, the AUD has been pushed around by overseas events with last weeks huge EUR/USD selling weighing heavily on the AUD.

Friday's local data saw the RBA credit for December come in up 0.3%, better than the markets 0.1% expectation. Base metals were weaker on Friday night with copper down 2.2%, zinc, aluminium and lead fell 2.2%, 1.4% and 1.6% respectively.

There is plenty of data out locally this week, though the main focus will be on tomorrow's RBA Board Meeting with most of the market already factoring in a 25 basis point rise to take the official cash rate to 4%.

Majors: The USD rallied to a 6-month high against the EUR on Friday, as continued EUR selling saw the currency trading down to 1.3850.

The US GDP for Q4 was released on Friday night and came in well above the markets consensus to be up 5.7%, the fastest pace in six years against the 4.5% expectation. Despite the strong GDP reading the equity markets ended the session lower.

The Dow was down 0.5% to 10067, the S&P 500 fell 1.0% to 1074 and the Nasdaq down 1.5% with investors selling equities on concerns over the outlook for Technology Company earnings.

SanDisk lost 12% as its sales forecast was lower than estimates, while comments from Microsoft that they had not seen a recovery in enterprise software which saw their shares finish down 3.4%.

Investors seem to be very cautious at the moment, given the strong GDP number you would have thought that equities would have had a strong night but all lost ground on news from two Technology companies.

This Friday will see the US Non-Farm Payrolls for January, with the market expecting a 200k increase in jobs.

Tonight in the US we have Personal income/spending and construction spending both for Dec, along with ISM manufacturing for the month of Jan.