Bell FX Currency Outlook: The Australian dollar benefited again from better than expected data out of China and traded just above the .9200 level on Friday night as concerns about lower Chinese growth abated.

Australia: With a market generally short the AUD, better figures from China on Friday afternoon helped push our local currency higher again on Friday.

With exports in the world's second largest economy higher by 5.1% last month as compared to predictions of 2% growth and better recent PMI's there seems to a floor to the Chinese growth story of 7 to 7.5% pa which has helped push the AUD higher. Industrial production rose by 9.7% which is the highest since July of last year and fixed asset investment met guidelines with a rise of 20.1%.

Retail sales were up 13.2% from a year ago for July. Inflation also seems to be in check with the CPI steady at 2.7% although the PPI fell by 2.3% from the figure a year earlier.

These figures overshadowed the RBA's release of their Quarterly Statement on Monetary Policy on Friday. The RBA has lowered
their GDP growth forecast for the end of 2013 from 2.5% to 2.25% and for mid-2014 to 2.5% from a previous range of 2% to 3%. Their forecast for growth remains at 2.5% to 3.5% for the end of 2014.

Growth is seen picking up significantly as natural gas exports come on stream by the end of 2015 with a range of 2.75% to 4.25% in GDP growth. It has been reiterated in the RBA report that the benefits of a lower AUD in future growth of economy saying a reduction in the exchange rate of 10% translates into an extra 0.5% to 1% in GDP growth over the next two years.

It has been noted that inflation as a nonissue over the next several years but made no mention of an easing bias.

With such a lackluster growth forecast in the near term, some analysts continue to believe there is at least one more reduction in the cash rate coming before the end of 2013.

There is a bit of a lull in local data this week with some credit card numbers due out today followed tomorrow by NAB business conditions survey and the federal Treasury's pre-election fiscal and economic outlook that was foreshadowed by Treasurer Chris Bowen last week.

Majors: In Europe this week we will see the release of some GDP figures for Q2 with rumours the German figures are better than expected. On Friday France's industrial production numbers were lower than anticipated although some trade data from the UK was better than predicted.

This helped the European equity indices push slightly higher although the US equity market finished approximately down 0.5% for the first time in a number of weeks. We will see the official release of GDP figures for Europe this week and today we will see some GDP preliminary figures for Q2 from Japan.
Economic Calendar
12 AUG AU Credit Card Purchases/Balances Jun
JN GDP Q2
JN Industrial Production YoY, m/m Jul

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