Bell FX Currency Outlook: The Australian Dollar rose to a two-week high after the Reserve Bank of Australia kept the cash rate unchanged and issued a neutral statement on the chance of further cuts.

Australia: This morning the AUD was trading at USD 0.9050, slightly up from 0.9034 yesterday. In overnight trade, the currency peaked at 0.9073, its highest level since 20th August.

The AUD has been the strongest performing currency over the past 24 hours. The RBA yesterday kept the cash rate at 2.50% yesterday as expected, and with no explicit hints of an easing policy bias in the Media Release, the market took it as another step
towards a 'neutral' policy stance.

The view seems to be the RBA is still on an easing bias, even if there were no explicit hints yesterday. Inflation is expected to remain consistent with the target and growth will be below trend, which keeps the door open to another easing, and most expect
another cut before year-end.

In Australia today, the June quarter GDP data are released with a rise of 0.4% in the quarter for annual growth of 2.3% being predicted.

The June quarter is expected to show another soft quarter for consumption, while business investment is expected to decline.

A 0.4% GDP result would confirm that the economy continued to lose momentum in the first half of the year, highlighting why the RBA has continued to cut interest rates and why it retains an easing bias.

Majors: The US Dollar was reasonably quiet last night. Better than expected US manufacturing data overnight continued to strengthen the case for Fed tapering later this month, but jitters remained on western military intervention into Syria.

President Barack Obama is urging Congress to take a "prompt" vote authorising military action, which appears to have won support from top two Republicans John Boehner and Eric Cantor, suggesting some sort of intervention is on the horizon.

US equities opened stronger overnight, but grinded lower through the session to finish only slightly higher. US Treasuries sold off following better than expected US data, although losses were pared later in the session.

The August ISM manufacturing series was better than expected rising to a 28 month high of 55.7. This coincides with the recent improvement in manufacturing PMIs for the euro-zone, China and the UK. The details of the survey were also encouraging. New orders climbed sharply to 63.2 from 58.3 and export orders rose to 55.5 implying firmer output gains ahead.

Employment slipped to 53.3, but remains at an elevated level. Today sees services indices in China, India, Europe and the UK. In the US, July trade and the latest Fed Beige Book are released, while the Bank of Canada meets and expected to make no change to policy settings.
Economic Calendar
4 SEPT AU GDP
EC Retail Sales
US Trade Balance
CA Bank of Canada Rate Decision

For the latest pricing, ranges, visit www.bellpotter.com.au