Bell FX Currency Outlook: The Australian Dollar has dropped back below USD 1.0300 for the first time in three days amid falls on US stock markets and weaker commodity prices.

Australia: There were no surprises from the US Federal Reserve at the FOMC Meeting. No changes were announced to the US$85bn/month asset purchase program, but they did say they are prepared to increase or reduce the pace of purchases as the outlook for the labour market and inflation change.

Given the recent softness in the data, it allows the Fed some scope to be more aggressive in the short-term if required. The Fed's Statement was otherwise little changed from the March commentary.

The Fed still sees activity expanding at a 'moderate' pace, the labour market continues to improve (although the unemployment rate remains high), housing is strengthening, but fiscal policy is restraining overall growth.

For markets, there was little movement after the Fed announcement. The AUD was sold off following some soft US data to break 1.0300.

In Australia today, March building approvals are expected to show a small 2.5% rise after the 3.1% gain in February, providing some confidence that the construction outlook is continuing to improve slowly.

In recent months however, most of the growth has been in multi-unit dwellings, so it would be more convincing if we were to see some uptick in private detached housing activity.

Majors: In the majors, the GBP/USD gapped higher last night after a rare piece of better-than-expected UK data. The UK Manufacturing PMI came in at 49.8 (48.5 expected).

Although still contracting, manufacturing activity is creeping back toward expansion territory (over 50). The GBP/USD moved up from 1.5530 to hit overnight highs above 1.5600, close to its highest levels since mid-February.

In Europe, most markets were closed last night for the May Day holiday. Tonight, the ECB is widely expected to cut rates by 25bps and final Eurozone Manufacturing PMI's are also released tonight.

In the US, trade, productivity and weekly jobless claims data are due.
Economic Calendar
02 MAY AU Building Approvals
CH HSBC Manufacturing PMI
EC ECB Announces Interest Rates
US Trade Balance