Bell FX Currency Outlook: The Australian dollar has had a rather quiet night of trading as better figures from the US on their economy and more accommodative comments from members of the US Federal Reserve calmed markets.

Australia: With the AUD trading in a fairly tight range of about one cent overnight, better numbers from the US on incomes, pending home sales and consumer spending helped bond yields to fall slightly and the major equity indices in both Europe and the US to rise with the Dow index topping 15,000 again at the close of trade.

Gold fell to below US$1200 an ounce for the first time in almost three years as the bears and their predictions were gaining more popularity. There were comments from three Federal Reserve officials overnight that generally calmed markets, which were reeling after Fed Chairman Bernanke's comments last week.

NY Fed President Dudley who is part of the group that believes Fed purchases of securities should fall later this year as the unemployment rate falls to 7% has reiterated that even though Fed buying may reduce there is still in place accommodative strategy that will provide stimulus to the economy.

He also said there will be no selling of the mortgage backed securities they hold on the Fed balance sheet. Fed Governor Powell also said that the sharp rise in US bond yields last week were not compatible with the Fed's policy and growth forecasts.

Today we will see private sector credit growth figures but later tonight some are interested to see what levels of AUD are being held by the world's central banks when the IMF COFER data is released. Will Australia still be the "safe haven" it was advertised as several months ago?

Majors: In the US, consumer spending rose 0.3% last month as compared to the previous month where it fell by 0.3%. Personal incomes rose 0.5% and pending home sales increased by 6.7% which is the highest figure since December, 2006.

The better numbers continued with weekly jobless claims falling from 355k to 340k last week. In Europe, economic confidence figures rose to 91.3 this month compared to a lower expected figure and German unemployment fell to 6.8% which also was lower than expected.

In UK the news was not so good as annualised UK Q1 GDP was revised downward to 0.3% from 0.6% previously. The EUR was slightly stronger against the greenback as the possibility that the ECB could go to a "negative interest rate policy" in the future was discounted.
Economic Calendar
28 JUNE AU Private Sector Credit MoM/YoY May
CH MNI Business sentiment Indicator Jun
US U. of Michigan Confidence Jun

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