Bell FX Currency Outlook: The Australian Dollar dipped
below Parity last night (a "reverse" Parity party) as
headlines started to emerge ahead of this week's EU
summit as clear signs are yet to emerge the global
industrial cycle has bottomed and a lack of policy clarity
from the euro area being evident.

Australia: Last week's catching of one's breath regarding the European
situation reversed in a heartbeat last night. Pressure on equity markets in
Europe and the US returned with gusto. Additionally there was particular
pressure on the investment / bond / banking markets of the troubled Euro
periphery (Spain and Italy). Now Cyprus is seeking financial support from
European authorities for a bailout, which makes it the 5th country to do so
as we approach the EU Leaders' Summit at the end of the week. And to
top things off, ratings agency Moody's has downgraded the ratings of 19
Spanish banks by one to two notches, citing the reduced creditworthiness
of the Spanish sovereign. Not happy Jan. In currency markets it was
relatively quiet with little change to levels. Today there are few major
releases. We feel the AUD is toppy and is likely to be sold into any rallies
as clear signs are yet to emerge that the global industrial cycle has
bottomed, and with a lack of policy clarity from the euro area. There isn't
any local data today. RBA Deputy Governor Guy Debelle is a panellist at a
Mortgage Finance conference in his hometown Adelaide.
Majors: The US Dollar was fairly much unchanged overnight. US
Treasuries rallied at the long end on safe-haven demand due to concerns
that this week's EU Summit will not deliver sufficient policy response. US
equities gave back recent gains as did European equities. Base metal
prices were lower, spot gold rose and oil fell overnight on continuing
European debt concerns ahead of the EU summit starting Thursday and
as concerns of supply disruptions in the US from Tropical Storm Debby
eased. Tonight we have May month UK public sector net borrowing figures,
then testimony from BoE Governor Mervyn King as well as second tier
releases in the US.
Economic Calendar
26 JUNE AU RBA's Guy Debelle Speech
UK Public Sector Net Borrowing
US Consumer Confidence
US Richmond Fed Index