Bell FX Currency Outlook:
The Australian Dollar has rallied solidly overnight due to improved confidence in financial markets, brought about largely from solid economic data in Europe and the US, as well as a successful Spanish debt auction.

Australia: Yesterday's minutes released by the Reserve Bank of Australia highlighted that yes, the RBA is quietly optimistic when considering the domestic economy.

However, this is largely offset by the real possibility of poor prospects on Europe. The statement stated the Bank does not consider that funding is as stressed as it was during the GFC and that the December rate cut was an insurance move on European concerns. As far as local conditions were concerned, there was no "strong
need to cut interest rates".

Overnight, European and US equities rallied strongly with all indices higher, which fuelled the rise in the AUD. Today in Australia we have the Westpac leading index for October being released, while this afternoon, the Bank of Japan is expected to keep policy unchanged.

Tonight the Bank of England releases the Minutes from their December policy meeting and Eurozone consumer confidence data for
December as well as US existing home sales for November are released. The next significant Australian data release after today is not until 30 December, being the credit and RP Data-Rismark house price data, and then there isn't any further data until the week beginning 9 January.

So all in all, our take on the AUD, given the lack of data to come, is that this rally is potentially short lived, given the concerns for the health of the global economy.

Majors: As written above, resilient German business confidence made the news last night. Germany's Ifo economic institute reported an unexpected rise in business sentiment overnight while a separate survey showed consumer confidence was steady in

Germany despite the continent's ongoing debt crisis. Investor confidence in Europe also received a boost after the Spanish government was able to successfully auction EUR 5.65bn in bonds (3 and 6 month). Data released in the US showed a boost in the struggling housing sector with new home starts rising 9.3% to 685,000, while permits increased 5.7% to 681,000.

A more positive US housing outlook in the US is a significant issue for the economy given the multiplier effect from such an improvement. Tonight's main focus will be the ECB's 3-year refinancing tender.

Economic Calendar
21 DEC AUS Westpac Leading Index Oct
EU Euro-zone Consumer Confidence Dec
US Existing Home Sales Nov