Bell FX Currency Outlook: The Australian Dollar has fallen below USD 0.9200 overnight in an extremely volatile session which was essentially the sequel to Wednesday night's reaction to the FOMC meeting which prepared financial markets for the scaling back of quantitative easing.

Australia: Concerns over credit conditions in China also weighed on market sentiment. The US Dollar has continued to trade higher, US and European equities fell and finished their session sharply lower and US Treasuries continued to sell off.

The spot gold price fell 5%! The AUD is trading at a 3 year low and, amongst other things, has been hurt by a preliminary report showing Chinese manufacturing activity unexpectedly shrank to a nine-month low of 48.3 in June, despite the strong likelihood that this data is somewhat "flawed".

However, given Australia's ties and dependency on China's economy, any signs of a slow-down in manufacturing, is seen as a negative for commodity markets and by stealth, the AUD. However the big story is the US Federal Reserve Chairman's announcement suggesting the US central bank could wind up its $US85 billion-a-month stimulus program by mid-2014.

Uncertain times lead to the USD. Hence the AUD is under the gun. It is also a reminder of the pecking order. At the end of the day the AUD remains a peripheral currency when compared with the likes of the USD, EUR, JPY and GBP.

Today, for the AUD, we feel some profit taking and buyers will test the waters and take the sting out of this sell off and there is nothing of significance due to be released today

Majors: As stated above, the USD was extremely well bid following the change in tact from the FOMC early yesterday morning. On top of this, better-than-expected US data seemed added to the situation.

The major currencies (EUR, GBP and the JPY) were more stable and managed to claw back some ground in late trading overnight. In contrast, the USD continued to slice into the soft underbelly of emerging market and commodity bloc currencies.

This dichotomy has been evident in recent weeks as layers of leveraged and low-conviction diversification investments have begun.

Today's session in Asia will again be characterised by large-scale portfolio adjustment, probably accommodated by central bank interventions in some currencies. In other news, there is a lot of market chatter about China clamping down on credit growth.

Shibor has gone through the roof, rising from about 2.7% in mid-May to 11% yesterday.

For Japan, BOJ Governor, Kuroda is speaking and it will be interesting to hear his take on the monetary easing so far, which has resulted in big swings in the JPY, the stock market and other financial indicators. Europe has the Eurozone Current Account due and, in the UK, the regular Public Sector finances report is will be released.
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