Bell FX Currency Outlook:
Having reached a 3 month high the previous evening, the Australian Dollar has retraced 1 US cent overnight as the markets reacted to ongoing negotiations between Greece and its private creditors as well as IMF warnings on the European crisis.

Australia: After a strong showing by commodities, equities and our AUD, last night saw the markets increase their aversion to risk with frustration returning at the pace (or lack of it) with Greece's debt negotiations.

In what clearly resembles a Test Match on a "road" as opposed to a "green top", there were reports of continued uncertainty about the size of any 'combined' euro area rescue fund.

Reports from America stated Portugal may require a second bailout package and there was further news S&P would qualify Greece "in all likelihood" as a default. In our analogy here, the ICC equivalent (the IMF) warned if the European crisis intensifies, it could detract 2 percentage points off growth if leaders don't become decisive.

Here in Australia today, the December quarter CPI is released with expectations for headline rate to have risen 0.2% to 3.3% annualised and the underlying rate to have risen 0.5% to 2.4% annualised. We absolutely think the RBA will cut rates in February.

Also today, skilled vacancies for December and Westpac leading Index for November are released. We see the AUD testing support at 1.0450 locally as we head into the Australia Day Public Holiday.

Majors: News the IMF reduced its global growth forecast to 3.3% in 2012 and 3.9% in 2013 softened markets overnight. Despite the latest forecasts being a fair way below the previous ones, the revision has not really come as a genuine surprise. The Euro zone is expected to contract 0.5% in 2012, the US to grow 1.8% and China to grow 8.2%. The frustration with the Greek debt talks was somewhat offset by the auction of 3 and 6 month Spanish bills which went well and some decent economic data released out of Europe and the US. Today is a big day as far as data and key meetings are concerned.

The US FOMC Meeting is top of the bill and interest rate forecasts will be released for the first time. There is also the ever important President's State of the Union Address. In the UK the BoE release the minutes of the January MPC meeting and Q4 GDP data are due. German IFO for January also released tonight, while tomorrow morning we have the RBNZ cash rate announcement.

Economic Calendar
25 JAN AU 4Q CPI
UK 4Q GDP
US House Price Index
US FOMC Rate Decision