Bell FX Currency Outlook: In a quiet session overnight, the Australian Dollar held yesterday's gains as local financial markets await a raft of economic data to be released today and the all-important release of the European Central Bank's second round of Quantitative Easing.

Australia: The main reason markets were quiet last night was the anticipation accompanying tomorrow's ECB's release of the second round of its Longer Term Refinancing Operation (LTRO).

Results will be known early tomorrow, with the markets expecting an uptake of between EUR300 and 500 billion, which compares with the EUR 489 billion in 3-year loans to 523 Euro Zone Banks provided last December (that already feels a long
time ago).

There are no arguments that financial markets have benefitted from this injection of liquidity, and this is being reflected in confidence measures in Europe which have shown improved readings and are trending in a superior fashion to last year's lows.

Turning locally, Australia's economic data releases today include January retail sales, which are expected to be weak again, and January private sector credit, which is expected to be soft as well. The other reading is construction work done in Q4, which is also expected to be modest.

We expect the AUD to continue its range trading today, with some potential for it to be sold on the back of the expected "weak" data releases.

Majors: The EUR was sold to below 1.3400 against the Greenback when it was announced Ireland will hold a referendum on the EU fiscal compact but this news did not have a lasting impact. It was felt this development is unlikely to derail the EU's fiscal treaty and "austerity determination".

US Data was essentially mixed. Oil prices declined for the second consecutive night, on continuing fears that the recent rally in oil prices will damage global growth. Gold rose overnight, supported by the upcoming injection of liquidity by the ECB.

However, the main game in town is the ECB's announcement of the LTRO. Analysts will study the take up by the 'weak' Euro-area banks, such as Spanish and Italian banks, to seek signs that there has been an easing in funding conditions in the markets that have been hit the hardest by the European sovereign debt crisis.

Once this is done, the next focus will be the semi-annual testimony to the House by Chairman of the US Federal Reserve, Ben Bernanke, and the release of the US Beige Book.

Economic Calendar
29 FEB AUS HIA New Home Sales Jan
AUS Retail Sales Jan
EU Euro-zone CPI Jan
US GDP 4Q