Bell FX Currency Outlook: The Australian Dollar has retreated from its recent highs as the G20 meeting begins in St.Petersburg and financial markets await the most recent US jobs data tonight.

Australia: The AUD has weakened as the USD regained some of its strength overnight. The release of trade balance figures locally yesterday did not move the currency as July registered a deficit of $.765bn as compared to the previous month's surplus of $.2bn.

This is the largest shortfall since January as exports fell and imports increased. The largest single decline in exports was due to lower gold shipments while exports to China, Australia's largest trading partner, have risen 15% in the last year.

Better figures recently out of China have helped the AUD rise from its recent lows several weeks ago. Today we will see figures from the AiG Performance construction index followed in the late afternoon by the latest foreign exchange reserve figures from the RBA.

We expect that the AUD could be for a volatile night after the release of non-farm payroll data from the US later tonight. A better than expected figure could see the chances of the US Federal Reserve beginning to lower their purchases of US Treasury and mortgage backed securities later this month increase.

Majors: Equity markets generally moved higher overnight but in a modest way and gold and oil both fell marginally as the G20 summit kicks off in St. Petersburg with Syria the main issue. With Russia's Putin refusing to support military action against Syria, the tensions between Russia and the USA are very high.

Although financial markets are tentative in regard to the political situation, all eyes will be on the non-farm payroll data for August where most analysts are predicting a rise in payrolls of 180k as compared to last month's increase of 162k. The unemployment rate is expected to remain steady at 7.4%.

Last night the weekly jobless claims fell to 328k which is the lowest level since 2007 and the ADP employment report said there were 176k new workers in the economy. The US ISM non-manufacturing index for this month was at 58.6 which is higher than
the 56 figure from last month and the 55 prediction.

The USD could move higher if the jobs report exceeds expectations thereby increasing the chance of more aggressive "tapering" by the US Fed later this month.

The USD strengthened versus the JPY overnight to over 100, the first time since July it has been at that level. Overnight the ECB and the Bank of England left their cash rates of 50 bps unchanged.
Economic Calendar
6 SEPT AU AiG Perf Construction Index Aug
GE Industrial Production SA MoM/YoY Jul
US Change in Nonfarm Payrolls
US Unemployment Rate Aug

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