Bell FX Currency Outlook: The Australian Dollar weakened yesterday to the low 0.9000's but has opened this morning slightly higher after a lackluster trading session offshore.

Australia: Analysts dissected the RBA minutes which were released yesterday from the August board meeting earlier this month for further clues on the likelihood of further interest rate reductions locally.

In somewhat of a surprise move the RBA referred to its communications strategy which was the first time they have discussed "how" they communicate their decisions to the market.

At the end of the day it appears that the likelihood of further rate reductions in the next few months has subsided although if economic conditions deteriorate further rate reductions are on the cards.

The RBA clearly sees the benefit of a lower AUD for the general health of the local economy. The bigger issue facing the AUD is how the US Fed may proceed in the near future in regards to its bond buying program.

Tonight in the US we will see the recent FOMC minutes where 65% of economists surveyed by Bloomberg still believe that Fed tapering will start in September.

Equity markets in the US were virtually flat last night although soft commodity markets were all softer as reports of a record corn harvest in the US lowered the price of corn and higher Indian cotton production halted the advance of the cotton price that had been rising strongly of late.

Also in the US tonight we will see July home sales. Later this morning locally we will see job data from DEEWR regarding vacancies. It is expected the shift away from mining projects will continue and some growth occurring in other parts of the economy.

Majors: Yesterday in New Zealand, their central bank announced that only 10% of new mortgage lending from October 1 would be allowed for new mortgage loans where the LVR is above 80%.

Rather than raise interest rates to cool the housing boom the central bank will try and curb more aggressive lending practices. In the short run this weakened the NZD.

In Germany, the PPI for July was lower than expected with a higher PPI of 0.5% yoy and a fall of 0.1% on a month to month comparison basis.

Some emerging nations currencies have taken a beating lately with the Indonesian rupiah and the Indian rupee down 4% in recent days as more investors shifted their attention to the larger economies. The EUR and GBP were stronger against the USD as repatriation flows were thought to have contributed to the movement.
Economic Calendar
21 AUG AU DEWR Job Vacancies Jul
US Existing Home Sales Jul
US Fed Releases Minutes from Jul FOMC Meeting

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