Bell FX Currency Outlook: The Australian Dollar has opened where it left off yesterday, following a night in which the key news was the release of worse than expected Euro Zone GDP data, confirming the ongoing recession.

Australia: Early in the overnight session, confirmation that the Euro Zone recession was getting worse came in the form of GDP results.

The Euro Zone area as a whole fell 0.6% (against median forecast of -0.4%) but of real interest were the German and French results, in which GDP fell by 0.6% in Germany and 0.3% in France.

Not surprisingly, the AUD fell on this news but then firmed with the US jobless claims data. In another sign of foreign exchange markets frustrating global monetary policy, the Governor of the Norges Bank said it had room to ease policy further, specifically to counter gains in the currency that interfere with the inflation target.

Today in Asia, markets will focus on a speech from RBA Assistant Governor Chris Kent on "Reflections on China and Mining Investment in Australia" and will keep one eye firmly fixed on the ongoing G-20 leaders' meeting in Moscow.

The AUD has held its ground this week in an environment where more analysts are calling for a lower AUD. We feel depreciation is somewhat inevitable, but given the sheer length of time it has remained above parity, it seemingly won't give ground easily.

As always, there are many factors involved, not the least being the RBA's decisions during 2013.

Majors: The moves in the EUR were the main news. Elsewhere, price action was pretty limited. In addition to the weak Q4 Euro Zone GDP data, there were comments from an ECB Governing Council member that it was "always possible" to see negative interest rates in the Euro Zone.

New claims for US unemployment insurance benefits fell last week to their lowest level since January 2008 was a good sign employment growth may be picking up. Let's hope so. From here, we look to the two-day G20 meeting of finance ministers and central bankers which completes today.

Major discussions regarding countries manipulating the value of their currencies and the recent heavy fall in value of the JPY will prove interesting. The phrase "currency war" is being regarded as "politically incorrect".

Economic Calendar
15 FEB EU Dec Trade Balance sa bn
UK Jan Retail sales volume inc fuel
US Jan Industrial production
CH Fev MNI Flash Business Sentiment indicator

For latest pricing, ranges, please visit www. bellpotter.com.au