Bell FX Currency Outlook: The Australian dollar holds ground despite International Monetary Fund's China forecast.

Australia: The currency held above Tuesday's closing levels for much of the offshore session, but it dipped early this morning as traders analysed the IMF's trimmed world economic expectations. The IMF forecast 3.10% growth for 2013, down from April's forecast of 3.30%.

China and other emerging economic powers now face new risks, the IMF warned, "including the possibility of a longer growth slowdown".

In Australia, NAB revised their RBA cash rate outlook yesterday after their June Survey reported the weakest reading for business conditions for four years.

Business confidence remains below trend and labour market forward indicators still point down. There is now a good chance that the RBA will ease in August.

Majors: Some big moves in currencies offshore overnight, with big falls in the EUR and GBP. The EUR/USD slid to its lowest level in three months, after dovish comments from ECB member Asmussen, who backed Draghi's comments last week that the ECB will maintain accommodative policy for an extended period. He also said the ECB would not rule out a further long term refinancing operation.

S&P downgraded Italy's sovereign credit rating by one notch to BBB from BBB+, citing the country's worsening economic prospects. The GBP suffered after UK manufacturing production fell 0.8% in May (+0.4% expected). GBP/USD is now at a 3-year low.

Economic Calendar
10 JULY AU Westpac Consumer Confidence Jun
CH Trade Balance (USD) Jun
US Fed Releases Minutes from Jun FOMC Meeting
US Fed's Bernanke Speaks on Economic Policy in Boston

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