Bell FX Currency Outlook:
The Australian Dollar rallied again on Friday night as stronger than expected US data saw investors continue to build long positions in commodity currencies.

Australia: The AUD/USD traded to a high of 1.0790 following the release of the US payrolls data. The US Non-Farm Payrolls data for January reported a rise by 243k against the markets expectations for a rise of 140k. US unemployment rate fell to 8.3% from 8.5%, its lowest level since February 2009.

Our AUD continues to perform well on the cross rates as well, with AUD/EUR trading above 0.8200 while AUD/GBP is sitting at 0.6800, both all-time highs. Also helping the AUD was the bounce in base metal prices with copper up 2.6%, nickel 2.0% higher and aluminium up 2.3%.

Gold edged slightly lower to close at US$1,737.90 an ounce while oil ended up 1.5% at US $97.84 a barrel. In Australia today, ANZ Job Ads data is released at 11:30 AEST.

Labour market conditions are showing some tentative signs of stabilising, however this improvement is concentrated in the mining states. Retail sales data for December is released as well, and with press relaying the very soft performance of this sector, a weak reading is likely.

On Tuesday the RBA will meet for the first time in 2012 and most seem to think the probability of an interest rate cut is less than 50% with many favouring a 25 bps easing in March and consideration of more afterwards.

We must remember the December RBA decision to cut by 25bps was a difficult one based on rising global risks and since then, global risks (seem to) have eased slightly, and on the domestic front the data indicates an economy that is tracking sideways rather than down. Position squaring in the AUD may occur later today ahead of tomorrow's announcement.

Majors: Friday night saw US equity markets post strong gains following the better than expect data with the Dow ending up 1.2%, S&P up 1.5% and the Nasdaq finished 1.6% higher. Also released was the US ISM nonmanufacturing data for January which came in at 56.8 from 52.6 well above the forecasts of 53.2 and the strongest reading since February
2011.

European activity appears to be levelling. The UK, Spain, Italy and France all recorded improvements in their December PMI data. The markets will be focused today on Greece's negotiations with its international creditors. Policymakers are hoping to reach an agreement by the end of Monday.

Economic Calendar
06 FEB AU ANZ Job Advertisements JAN
AU TD Securities Inflation JAN
EU Sentix Investor Confidence FEB
US Fed's Fisher (V) speaks on Economy in Washington