Bell FX Currency Outlook: The Australian Dollar is steady, after markets in the US and Europe cautiously welcomed a bailout deal reached by the ECB/EU/IMF, on Greek loans and some better-than-expected US economic data.

Australia: This morning the AUD is trading in the mid USD 1.0400's after rallying yesterday when Euro Zone finance ministers agreed to unlock loans to terms on Greece.

The country will receive the delayed tranche of aid (EUR34.4bn) from the ECB/EU/IMF with conditionality around structural reforms and budget restrictions remaining in place.

The measures aim to lower Greece's debt-to-GDP ratio to 124% by 2020, which is 20ppts lower than the current debt path. Greek authorities were given some relaxation of the original terms on its borrowings as the macro situation has deteriorated.

The OECD group of 34 industrialised countries released its latest outlook and slashed global growth for 2013 to 3.4%
from 4.2% in May.

The key reason for the downgrade is the recession in Europe and the knock-on effects to developing economies. For Australia
they are forecasting 3% growth for 2013 and 3.2% for 2014.

Looking at the AUD, the sell-off in US stocks is weighing on our currency as well, and this issue is likely to continue as it revolves around negative sentiment caused by negotiations between Republicans and Democrats.

They are trying to avoid the 'fiscal cliff' of tax hikes and spending cuts due to automatically take effect in early 2013. Locally, updated Australian Q3 trade data released yesterday was 0.1% which is consistent with OECD predictions for slower growth ahead.

In Australia today, data on Q3 construction work done will be released at 11:30AEDT and we expect the AUD to hold recent gains.

Majors: The US Dollar gained ground on US economic data that beat expectations overnight. "Core" capital goods orders rose as did the Conference Board measure of consumer confidence. Case-Schiller house prices rose in line with expectations.

Oil prices fell in choppy trade overnight weighed down by worries over the US budget talks and a cautious reaction to the news a deal had been reached to release emergency aid to Greece.

Spot gold prices fell as US fiscal concerns and a stronger USD outweighed the lift in sentiment following the Greek aid deal.

Base metals prices were generally stronger as were agricultural commodities prices, with wheat up 2.1% with US crop conditions hitting a record low, adding to supply concerns following a number of weather affected harvests around the world.
Economic Calendar
28 NOV AU Q3 CONSTRUCTION WORK DONE
EC OCT MONEY SUPPLY M3 %YR
US OCT NEW HOME SALES
US FED BEIGE BOOK
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