Bell FX Currency Outlook: The Australian Dollar has opened just under the USD1.0300 level as investor risk appetite improved overnight.

Australia: Yesterday the RBA kept the official cash rate unchanged at 3.5% as expected, while noting that "there has been a material easing in monetary policy over the past six months".

These comments suggest the RBA believe it can wait and see the Q2 CPI data later this month before further rate cuts are considered.

Following yesterday's rate decision some banks have reduced their RBA rate cut expectations for August. We feel a weak CPI reading is likely to see the RBA ease further as the recent rate cuts have not seen a boost in confidence or spending as yet.

Also released yesterday, was Australian building approvals data, which reported a rise of 27.3% for the month of May after a decline of 7.6% in April.

Base metals ended higher overnight with copper up 2.4%and nickel up 3.2%. Gold is firmer trading at US$1,617 an ounce up 1.2% while WTI oil rose by 4% to US$ 87.60 a barrel as supply concerns in Iran and monetary policy stimulus expectations saw increased buying demand.

Today locally will see the release of retail sales data for May. While many are expecting a weak reading, the AUD should be well supported due to solid offshore demand.

Majors: US equities closed higher overnight with the Dow up 0.6% while the Nasdaq and the S&P ended up 0.8% and 0.6% respectively. US factory orders reported a rise of 0.7% for May after the 0.7% fall in April.

The Dutch Senate approved the ESM bailout fund overnight but the Government continues to disapprove of the ESM's use to purchase sovereign bonds on secondary markets. Also in Europe, the ECB is expected to cut interest rates on Thursday while the market is expecting the BoE to announce further asset purchases as a stimulus measure for the economy. Tonight the US is closed for the 4th of July Independence
Day holiday.
Economic Calendar
04 JULY AUS Retail Sales May
US Markets closed for Independence Day
EU Euro zone Retail Sales May