Bell FX Currency Outlook: The Australian Dollar is weaker this morning as financial markets showed disappointment with overnight's ECB meeting and weaker than forecast data in Europe and the US.

Australia: There weren't any changes in policy by the European Central Bank or the Bank of England. As written above, markets had anticipated
more from President Draghi, however he did acknowledge the economic recovery is now subject to downside risks.

He added there had been discussion of a cut in interest rates. Hence by talking down the economy, the markets are interpreting Draghi's rhetoric as trying to limit appreciation in the EUR, especially in light of the BoJ's actions, which has seen the JPY weaken. Draghi also stressed that the Cyprus bailout should not be seen as a template for future bailouts.

Locally, Australian retail sales rose strongly in February following a similar increase in January, which is the strongest start to the year for retail sales since 2001.

It does, however, follow an convincing contraction in sales in a brutal retail environment in 2012. However, good news is welcome, and this pick-up is consistent with the improvement in consumer confidence to above-average levels and clearly reflects our lower interest rates.

Additionally, private residential building approvals rose solidly in February and the markets are becoming confident of a sustained upswing in dwelling investment.

Note that further strong data prints would reduce the chances of policy easing in the middle of this year. What for the AUD? After almost hitting USD1.0500 it drifted lower to below 1.0400 overnight and appears set to continue this tight trading.

In Australia today, there are no major economic data releases.

Majors: The USD/JPY rallied nearly 4% overnight following the Bank of Japan's decision to expand its money base. The move dragged AUD/JPY
along for this ride, to now be over AUD/JPY 100.00 this morning.

The Bank of England did not ease policy as expected, seeing the GBP rally hard from 1.5040 to ahead of 1.5230, possibly assisted by flow in the EUR running in the same direction. Today in Asia the markets will likely consolidate following last night's substantial moves.

Tonight, all focus is on US non-farm payrolls, which are expected to rise around 200K in March, although expectations have been wound back somewhat and the unemployment rate is expected to remain at 7.7%.

Economic Calendar
05 APR US Unemployment Rate Feb
US Non Farm Payroll Feb
US Trade Balance Feb
US Consumer Credit Feb

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