Bell FX Currency Outlook: The AUD is slightly higher this morning after some positive data out of the US and the UK boosted investor optimism.

Australia: The better than expected US and UK manufacturing data saw risk assets in demand. Commodity prices, equity markets and the AUD dollar were all beneficiaries as a result. The AUD is currently trading around USD1.0420 at the moment, and we expect that it will remain in a fairly tight trading range ahead of this afternoons RBA interest rate decision (2:30pm AEST).

While the markets are pricing in the possibility of a cut at around 33%, it is widely expected that the interest rates will be kept on hold at 4.25%.

Attention will be closely paid to the accompanying statement should the RBA hold, looking for indications as to their likely next move.

Markets are currently pricing up to a 90% chance that they will cut interest rates at the next meeting in May, once the CPI data has been
released and they have a greater understanding of the current economic conditions in our region.

Retail Sales in Australia is also due for release today. It is expected to post another modest result as we wait to see evidence that theresults from the interest rate cuts last year have filtered through and started to have a positive effect on the struggling sector.

Majors: As mentioned above, the US and the UK both released positive manufacturing results. The US ISM survey rose by 1pt in March up to 53.4, which was better than the expectations of only a slight rise.

It was the same for the UK PMI result which beat expectations rising to 52.1 in March. Equity markets across the board rose; in the US the DOW was up 0.4% and the S&P500 up 0.8%; and in Europe the gains were more convincing with the FTSE 100 up 1.8% to 5875 and Germany's DAX up 1.6%.

The EUR/USD was stronger overnight as the USD lost ground. The positive results out of the European region provided support for the currency pair; and we expect that it will continue to remain supported until the meeting of the central bank later this week.

Economic Calendar
03 APR AU Retail Sales
AU RBA Cash Rate Target
CH Non-Manufacturing PMI
US Minutes from FOMC Meeting