Bell FX Currency Outlook: The Australian dollar extended its recent decline again overnight as the USD strength story continued.

Australia: It seems markets are becoming increasingly optimistic about the prospects for the US economy following on from yesterday's relatively positive comments from the FOMC and also the release of the stress tests recently carried out on US banks, which showed the majority are well positioned to withstand difficult economic conditions.

Given the brighter outlook for the US economy, strong USD buying has emerged and the majority of other major currencies, including the AUD have been sold off.

The AUD appears vulnerable in the short term with a move below USD1.0400 possible. Of interest for local markets today will be the release of the RBA's quarterly Bulletin at 11.30 AEDT.

Yesterday's WMI index of consumer confidence release may give the RBA something to think about heading into their meeting next month. The index fell 5.0% in March from February, reflecting the Australian consumer's concerns over recent interest rate rises and increasing unemployment.

Majors: Good news in relation to the US economy has finally managed to drag some of the spotlight away from the recent bad news in Europe. For the first time in a long time, US Treasury yields managed to rally a little, taking the USD higher as well.

The USD strengthened to an 11-month high against the JPY, while also recording solid gains against the EUR and the majority of the commodity currencies.

Norway's Central Bank surprised markets overnight by cutting their official interest rate to 1.5% from 1.75%. The Norwegian Krone has appreciated strongly in recent times, due mainly to Norway's AAA credit rating and the NOK's strong correlation with the price of oil, so this latest move by the Norges Bank is seen as an attempt to try and limit NOK strength.

As a result the krone fell 2.2% against the USD, but should oil prices begin to rise again, it appears likely the krone would appreciate as well.

Economic Calendar
15 MAR AU RBA March Quarter Bulletin
AU New Motor Vehicle Sales FEB
EU Euro-zone Employment 4Q
US PPI FEB