Bell FX Currency Outlook: The Australian dollar edged its way towards USD1.0800 during yesterday's local session but is back down under USD1.0700 this morning.

Australia: Comments out of China yesterday afternoon, stating they were supportive of the Euro-zone and considering providing further financial support to the troubled region, sent equity markets higher and sparked a round of EUR and AUD buying.

The renewed market confidence turned sour overnight once rumours began to emerge that a Greek default was once again a real possibility.

The EUR was sold off and the AUD went with it. Overall the outlook for the AUD in the short - medium term still suggests the local currency will remain strong, with a move back above USD1.1000 considered likely by many forecasters.

Australia's relatively high interest yield is very attractive for offshore investors, and with the RBA signalling that official interest rates are unlikely to fall by a large amount anytime soon, this yield advantage will be sustained for quite some time to come.

The European banks are cashed up thanks to a large funding injection from the ECB in December, and if they are reluctant to lend these funds within Europe, they will be looking for where best to gain some return and Australian assets present a pretty attractive alternative.

Today we await the release of Australian labour force data for January. Market expectations are for an increase in the unemployment rate to rise to 5.3%, with the number of employed expected to increase by 10k.

Majors: The euro-zone finance ministers met overnight to discuss releasing further bailout funds for Greece. A decision on releasing the EUR130bn second Greek aid package has been delayed until after their next meeting on February 20. The other

Euro-zone minsters are becoming increasingly frustrated with Greece repeatedly failing to meet budget targets and failing to implement promised cuts.

Without the bailout funds Greece could default on its debt as early as next month. News out of the US was a little more encouraging, with both the empire manufacturing survey and the NAHB housing market index results exceeding expectations.

The FOMC Minutes from the January meeting suggested that further stimulus might be provided soon.

Economic Calendar
16 FEB AU Employment Change JAN
AU Unemployment Rate JAN
US Housing Starts JAN
US PPI JAN