Bell FX Currency Outlook: The Australian dollar slid further on Friday night and has opened this week's trade in the low 0.9100's as the USD gained further strength after more comments from several US Federal Reserve Bank officials.

Australia: The number of US Fed officials that offered comments during the middle of last week continued on Friday adding strength to the USD
with the AUD being one of the main victims of its strength along with the JPY which weakened to its lowest point in three weeks.

Richmond (Virginia) Fed President Jeffrey Lacker who is a non-voter at the moment and was opposed to QE3 said that he saw trend GDP growth at around the 2% level for the foreseeable future and expected financial markets to be volatile.

Fed Governor Jeremy Stein said he expected a slowing of stimulus at the September meeting but that further changes were dependent upon how the underlying data looked. Some analysts believe that the Fed's buying will reduce from USD85bn to a level of USD70bn and then further taper to nil purchases by either March or June 2014.

It is a hugely busy week for data beginning today with the figures for the AiG/PWC manufacturing PMI index, house prices and sales figures, TD
inflation and the RBA commodity price index. Also later today we will see Chinese manufacturing PMI data from the government and also HSBC
where most expect a reading of 50 versus the previous month's figure of 50.8.

This might add to the pressure on the AUD as well. Tomorrow the RBA meets to decide upon its official cash rate with the market only expecting a 20% chance of a change (lower) from its current level of 2.75%. We expect that the RBA will say once again that the AUD remains at historically high levels given the falls in the terms of trade and that they maintain an easing bias.

We expect the AUD could be under further downward pressure. RBA Governor Stevens speaks on Wednesday as well. On Friday night the IMF released the results of the composition of official FX reserves from 144 reporting entities and since the end of 2012 the ownership of the AUD has increased from 1.48% to 1.63% of the total.

The AUD and CAD were only officially added this last quarter. The USD dominates with 62% followed by the EUR with 24%, JPY and GBP both at
4% and the CHF at 0.3% of the total.

Majors: In the US, the Chicago PMI figures were disappointing although the University Of Michigan consumer confidence figures were slightly higher than forecast. With more talk about the reduction of Fed stimulus continuing on Friday, major equity indices were all softer ending several
days of gains.

The gold price recovered slightly after trading below USD1200 an ounce last week. ECB President Draghi pledged on the weekend to keep monetary policy accommodative. The data flow from the US begins tonight with ISM manufacturing figures followed by ADP payroll figures on Wednesday and the all-important employment report on Friday where most analysts are tipping a 7.6% unemployment rate.
Economic Calendar
01 JULY AU AiG Performance of Manufacturing Index Jun
CH HSBC Manufacturing PMI Jun, Manufacturing PMI Jun
US ISM Manufacturing Jun, Construction Spending May

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