Bell FX Currency Outlook The Australian Dollar has continued to fall trading at a new three-year low on Friday night as the US non-farm payroll data for July fell short of expectations and a few analysts doubted whether US Fed stimulus would be reduced in September.

Australia: The string of better than expected economic news announcements out of the US was broken on Friday when the jobs data for last month saw only 162k jobs being created after projections of 185k new jobs were predicted.

The unemployment rate fell from 7.6% to 7.4% as more workers were discouraged and the number looking for work fell. There were also small lower revisions to previous job figures. Although the actual job numbers were disappointing as compared with much of the better news from the US last week the ISM manufacturing data for July rose to 55.4 from 50.8 last month and is now at the highest point since mid-2011. All major equity indices in the US rose modestly with the Dow and S&P 500 again touching record levels.

On Friday, the Australian government reduced their forward revenue estimates by AUD33bn and projected a surplus would not be achieved until 2016-17. PPI figures for Q2 rose only 0.1% as compared to the previous quarter of 0.3% further setting the stage for a reduction by 25 bps in the cash rate of 2.75% when the RBA meets tomorrow afternoon.

With the federal election now set for September 7, it is expected that this will be the last reduction in interest rates before the election since the September board meeting is scheduled only 4 days before the election.

In China, over the weekend we saw nonmanufacturing PMI figures for July which were 54.1, up slightly on last month's 53.9 figure with a business confidence index also higher.

Today, we see some retail sale figures for June and TD Securities inflation data for July. Today in Australia NSW celebrates a bank holiday.

Majors: Tonight from the US we will see some non-manufacturing ISM data and the first of several US Federal Reserve speakers scheduled throughout the week. With the jobs report snapping a series of better than expected economic news releases last week, all eyes and ears will be on these Fed members to see what they might think about the pace and timing of the reduction in US Fed stimulus which is still widely predicted to begin in September.

Although the unemployment rate fell last month in the US there is still further progress that needs to be made to reach the Fed's goal of a 6.5% unemployment rate. The Bank of England will also release some inflation data and we will see some PMI data from the UK as well.
Economic Calendar
5 AUG AU Retail Sales Q2
EU PMI Services Jul
EU Retail Sales Jun
US ISM Non-Manufacturing Jul

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