FX DAILY REPORT

WEDNESDAY AUGUST 3 2011

The Australian Dollar has fallen another US cent overnight after the Reserve Bank of Australia kept the cash rates on hold yesterday and the release of weak economic data out of the US.
Australia: This morning, the Australian Dollar was trading at USD 1.0780, which is 3 US cents below levels seen only last Thursday evening. Its descent has been steady and commenced following the RBA announced no change to the official Cash Rate of 4.75% in Australia. RBA Governor Stevens said while the June quarter inflation figures were high, it (inflation) should stay in the 2 to 3% target range for the rest of the year. Hooray said most market watchers! In their statement, the RBA said it remains concerned about the medium-term outlook for inflation and it considered whether the recent information warranted further policy tightening, a reference to the abovementioned CPI data. The acute sense of uncertainty in global financial markets over recent weeks meant they swayed to remaining on hold. Debate rages if the next move is up or down. The focus for the Australian market today is the release of June retail sales figures and international trade data. Retail sales are expected to be flat while the international trade surplus is expected to increase on the back of strong export growth. Majors: The US Dollar received a boost following the US debt deal. The strength in the USD overnight and the movement back towards it as a safe haven trade was in stark contrast to what we have seen in recent weeks. The debt deal saw the US Senate pass legislation to raise the debt ceiling by 74 votes to 26. President Obama has signed it into law. Yesterday the House of Representatives voted 269-161 to raise the US debt limit by at least US$2.1tio and cut federal spending by US$2.5tio over the next decade. The problem now is debt deal itself is creating fears for the economic outlook, as the deal requires a deep pullback in government spending at a time when the economy remains soft. Stock markets closed significantly lower overnight. The personal spending data for June showed a 0.2% fall (median +0.1%), the first fall in almost two years, while the savings rate rose to 5.4% from 5.0%. Coming after the weak ISM manufacturing data on Monday, is has escalated fears that the US economic recovery is losing momentum. Offshore, the US ADP employment data are released tonight, while services PMIs are due in the US, Europe, UK, China and Australia.
Economic Calendar 3 AUG

Bell FX Currency Outlook

Australian Dollar / US Dollar

1.20 1.10 1.00 0.90 0.80 0.70 0.60 Sep-05

Sep-06

Sep-07

Sep-08

Sep-09

Sep-10

Sep-11

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Todays Forecast Range

USD 1.0675 - 1.8000

Currencies AUD / USD USD / JPY EUR / USD GBP / USD NZD / USD AUD Crosses AUD / JPY AUD / EUR AUD / GBP AUD / NZD AUD / CAD Australian Rates Official Cash 3 Month Bill 10 Year Bond US Rates Fed Funds 3 Month Libor 10 Year Bond Commodities Gold (US$ / oz) Oil (WTI) US$/bbl) CRB Index Equities ASX 200 Dow Jones FTSE Hang Seng Nikkei Last 1.0746 77.21 1.4180 1.6279 0.8627 Last 83.03 0.7577 0.6594 1.2443 1.0328 Last 4.75 5.03 4.80 Last 0.25 0.264 2.611 Last 1660.55 93.26 341.82 Last 4434 11867 5718 22421 9845 0.257 2.744 - / + (%) +2.6 -1.7 +0.1 - / + (%) -1.4 -2.2 -1.0 -1.1 -1.2 5.07 4.91 Previous High 1.1009 77.83 1.4283 1.6328 0.8785 High 85.59 0.7709 0.6744 1.2566 1.0517 Previous Low 1.0776 76.96 1.4151 1.6225 0.8634 Low 83.04 0.7592 0.6615 1.2421 1.0357

AU Retail Sales JUN AU Trade Balance JUN CH China Non-manufacturing PMI JUL US Factory Orders JUN

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