AUD/USD: US Economic Outlook Continues to Ameliorate

The US dollar is foreseen to sustain its weakness alongside the Australian dollar on risk-on trades today as European leaders and the International Monetary Fund clinched a deal to reduce Greek debt, paving the way for the release of needed bailout funds for the country. Meanwhile, economic conditions are further turning positive for the US economy as early estimates suggest strong Cyber Monday sales while gauges of housing and consumer confidence are deemed to improve further.

At their third meeting in two weeks, Greece’s international lenders finally concurred to slash Greek debt to 124 percent of Gross Domestic Product by 2020 through a package of steps. The deal finally clears the road for Greece to receive aid payments of about 44 Billion Euros to be disbursed in three installments, effectively helping support the country’s ailing banks and allowing the government to pay wages and pension in December. European Central Bank President Mario Draghi hailed the development, saying that the deal will reduce uncertainty and increase confidence in the Euro area.

Over to the US, Americans are seemingly feeling the urge to spend this holiday season. After the four-day holiday weekend from Thanksgiving through Sunday posted healthy increases in sales and traffic this year compared to 2011, early reports suggest that Cyber Monday was another hit. IBM says that its cloud-based digital analytics platform showed sales yesterday jumped by 24.1 percent from last year. Meanwhile, PayPal also reported that it was seeing 196 percent more mobile payment volume this year. Cyber Monday is expected to be the busiest Web shopping day of the year for a third consecutive year, with retailers estimated to rack up online sales of $1.5 Billion, up about 20 percent, according to research firm comScore.

Such promising trends in consumer spending are set to continue on leading to Christmas as the Conference Board is believed to reveal that consumer sentiment rose to its strongest level in nearly five years this month. The CB Consumer Confidence index is estimated to incline from 72.0 points to 73.1 points in November, the highest reading since February 2008. Recent improvement in the labor market likely continued to shore up moods among Americans. With consumer spending accounting for about 70 percent of US economic activity, prospects that purchases would provide a healthy boost to the economy in the fourth quarter are seen to jump.

Continued improvements in housing are believed to be another factor in rising consumer confidence. In a positive sign that record low mortgage rates are spurring robust demand, home prices are maintaining their steady incline. The S&P/CS Composite-20 House Price Index is projected to have increased by 2.9 percent in September, larger than the 2.0 percent rise recorded in the previous month. Complementing this report, the Federal Housing Finance Agency is seen to report that its House Price Index for September rose by 0.4 percent to follow up the 0.7 percent increase in August. Amid a brightening outlook for the US economy, demand for the Greenback is deemed to decline, warranting a long position for the AUD/USD today.