Bell FX Currency Outlook: The Australian Dollar is steady at USD 0.9650 following yesterday's 'no change' announcement
at 2.30pm by the RBA and a relatively quiet overnight session offshore.

Australia: Yesterday in Australia, the RBA left the cash rate unchanged at 2.75% which was widely expected. The Board appeared to have a less definitive view on the scope for further easing afforded by the inflation outlook, and strongly suggests that any further move on rates will likely require at least one further update on the Australian consumer prices.

Most retain a forecast for the cash rate to be lowered by 0.25% towards the end of the year. However, the tone of the statement accompanying theRBA board's decision prompted investors to sell off the AUD yesterday and implies more evidence of downside potential for our currency.

Today's focus is the release of the Australian gross domestic product (GDP) figures for the March quarter at 11.30am AEST and this release could directly impact the AUD.

AAP's survey of 14 economists on Monday showed a median forecast for GDP to have grown by 0.8% in the March quarter and whilst it is "backwards looking number", it is important nonetheless, as it is the bedrock for forecasts of the year ahead.

Majors: In currency markets, it was a night of few flows according to trading desk commentaries, with major currencies trading within recent ranges.

Base metals prices were higher overnight, continuing the recent volatility in the lead up to US payrolls this Friday. The USD was mixed and largely unchanged on balance.

In this environment the USD has been generally higher against other currencies, the DXY index up by about 0.15%, although GBP was stronger and the JPY pretty much marking time.

More broadly, the market remains focused on pricing the timing and extent of US Federal Reserve QE tapering. It is thus looking towards the US payrolls data on Friday for guidance.

This suggests limited price action into the end of this week. However, overnight, Ester George, the Kansas Fed President urged the central bank to cut back on its $85bn per month program because of the improving economy. She also expressed concern
that the current low interest rate environment was encouraging investors to buy riskier assets.

Also last night, John Williams from the San Francisco Fed said that a modest pull back in the bond buying program could be
appropriate as early as this summer.
Economic Calendar
05 JUNE AU GDP Q1
AU AiG Performance Service index May
US Federal Reserve Releases Beige Book
EU Euro-Zone GDP Q1 P